NZD/USD Surges to Fresh Highs But Caution Advised
- NZ Finance Minister says strong NZD reflects strong economic fundamentals.
- NZD/USD trades at a 10-month high.
- Latest rally may need to consolidate before attacking fresh highs.
Fundamental Forecast for NZD: Neutral
The NZD got a fresh shot in the arm Friday after Finance Minister Steven Joyce said that he was concerned about the strength of the Kiwi and that it highlights the strength of the New Zealand economy and the country’s robust export markets. Speaking to Bloomberg, Joyce said that he did not have an opinion on the NZD in contrast to comments from RBA deputy governor Guy Debelle who talked down any notion of a rate hike in Australia. A combination of renewed buying in the Kiwi and a weak USD saw the pair trade at a high of 0.74504 within a whisker of the September 5, 2016 high of 0.74857. The Kiwi has rallied nearly by over 8% against the USD since early May as the NZ economy continues to grow, driven by tourism, construction and immigration.
A look at the monthly charts sees the pair heading back towards two-year highs with the 50% Fibonacci resistance level at 0.75435 ahead of 0.78540. Support is seen at 0.72395. The Stochastic indicator shows the pair trading in overbought territory, leaving us looking for a pullback before considering setting up any long positions.
Chart NZDUSD Price Monthly Timeframe (March 2009 – July 2017)
--- Written by Nick Cawley, Analyst
To contact Nick, email him at firstname.lastname@example.org
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