Welcome to my blog! I am HappyPip, lady trader of the Commodity Dollars or "ComDolls!" We will look at price action of the Australian Dollar, New Zealand Dollar, and the Canadian Dollar, as well as their respective economies, and how commodities prices may affect their long term movements. Put on a "happy face" and come join me, won't ya! :)
Watching NZD/USD
Greetings Forex friends! I thought I'd share what looks like an opportunity to play NZD/USD as it approaches a significant support area on the weekly chart.
It looks like the Kiwi is currently taking a breather from its decent against the Greenback, but it could potentially fall to the major support area (around .6830) on the weekly chart, last tested September 2007. I am waiting to see how it reacts in this area. If we see a pullback, which could be likely after a fast and furious move, I look to sell back into the momentum. We may also see the pair consolidate and range as well (another likely market behavior after a dramatic move).
Fundamentals have been on the side of a weaker Kiwi as commodity demand and prices have fallen. This can weigh on the New Zealand economy as around 70% of its exports is commodity based. Also, we saw a recent 25 basis point rate cut by the RBNZ to bring interest rates down to 8.00%, with speculation that we may see further rate cuts by the end of this year.
Doesn't look good for the Kiwi for now as this is currently being priced into the pair, but as we all know, anything can happen in the markets. You can't rule out a swing higher at support as interest rate differentials remain attractive for the Kiwi, as well as long term commodity demand. For now, I plan on just waiting to see how the currency pair reacts as it makes new one year lows.
Until then, stay tuned for new ideas and updates. Good luck!
