Historical
Highest: 0.8816 USD on 31 Jul 2011.
Average: 0.7543 USD over this period.
Lowest: 0.6619 USD on 07 Jun 2010.
Rule:
NZD/USD: The recent strength of the kiwi, a currency sometimes overlooked by traders, made its moves much more predictable. This applies to support and resistance lines alike. This is a very safe pair to trade, not a great deal of volatility but predictablilty.
Analysis and Recommendation:
The Kiwi fell down from a new monthly high of 0.7980, and currency should weaken further over the near-term as the shift away from risk-taking behavior gathers pace. As the slew of credit-rating downgrades in Europe drags on investor confidence, we should see the flight to safety this week, and the NZD/USD looks primed for a major decline as it appears to have carved out a lower top in January.
As the sovereign debt crisis threatens the world financial system, the Reserve Bank of New Zealand warned of higher funding costs dragging on the economy, andincreased risk for contagion is likely to bear down on the exchange rate as New Zealand’s reliance on international financing dampens the appeal of the kiwi. RBNZ Governor Alan Bollard to keep the benchmark interest rate at 2.50% throughout the first-half of 2012, and the central bank head may preserve the record-low rate over the medium-term as the fundamental outlook for the isle-nation remains clouded with high uncertainly. In turn, Moody’s Investor Services warned that New Zealand credit rating may be at risk should it face increased difficulty in obtaining external financing, and encouraged the government to tackle its budget deficit as the central bank continues to shore up the real economy.
However, as the region benefits from the rebuilding efforts from the Christchurch earthquake, positive developments coming out next week may help to prop up the New Zealand dollar, and the currency may trend sideways in the days ahead as the NZD/USD maintains the narrow range.
New Zealand, may see a drop in its exports as the euro drops increasing the costs of imports and the EU economy sags.
Originally posted here
