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FX Headlines: Kiwi Rallies Even as Gold, Silver Fall

FX Headlines: Kiwi Rallies Even as Gold, Silver Fall

2011-05-26 13:43:00
Christopher Vecchio, CFA, Sr. Currency Strategist

The markets remain risk-averse, but that hasn’t stopped traders from fleeing to the New Zealand Dollar. The commodity currencies pushed back, slightly, against the funding and safe haven currencies in the overnight, with the two antipodean currencies leading the way against the Greenback and the Yen.

fx_headlines_kiwi_rallies_despite_commodity_pullback_body_Picture_1.png, FX Headlines: Kiwi Rallies Even as Gold, Silver Fallfx_headlines_kiwi_rallies_despite_commodity_pullback_body_Picture_7.png, FX Headlines: Kiwi Rallies Even as Gold, Silver Fallfx_headlines_kiwi_rallies_despite_commodity_pullback_body_Picture_4.png, FX Headlines: Kiwi Rallies Even as Gold, Silver Fall

Fundamental Headlines U.S. Jobless Claims Unexpectedly Climbed Last Week - Bloomberg

U.S. Stocks Drop on GDP Data, Jobless Claims - Bloomberg

At Summit, G8 Powers Urge Yemen Leader to Go - CNBC

Japan Seeks Trade boost from G8 Summit – Financial Times

Lagarde Preparing Global Tour for IMF Bid - WSJ

NZDUSD: The New Zealand Dollar had its swiftest rally in nearly eight weeks as a report showed that a major Chinese investment firm would invest heavily in the antipodean nation. The Kiwi-Dollar pair rose even as commodities fells; the Kiwi spot has a significant +0.357 correlation with Gold, and a +0.374 correlation with Silver. In light of a report earlier this week that New Zealand’s inflation expectations for the next two years are rising, the NZD/USD pair has risen for three consecutive days, rising from a week-low of 0.7859 on Monday to as high as 0.8118 today. Of the major currencies, the New Zealand Dollar rose the most, while the Yen trailed the pack. As of the time this report was written, the Kiwi was up 1.27 percent on the day against the Greenback.

Taking a look at price action, the NZD/USD pair was able to continue its push towards the 0.8100 exchange rate, a level that the pair was unable to hold above earlier this month. The pair’s short-term moving averages on the daily chart remain above the long-term moving averages, a technical pattern that suggests further gains. The Kiwi’s RSI continues to rise, now at 61, and the Slow Stochastic oscillator maintains its bull momentum, with the %K greater than the %D, at 78 and 68, respectively. After holding a bearish divergence for the month of May, the MACD Histogram is diverging bullish, with a differential of 3, and looks to trend higher. The New Zealand Dollar has been an attractive opportunity for investors seeking a higher yield despite the broader shift to risk aversion amid the European sovereign debt crisis, and despite continuing woes and the fear of contagion, the Kiwi could continue its push higher.

Written by Christopher Vecchio, Currency Analyst

To contact the author of this report, please send inquiries to: cvecchio@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


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