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We’ve got a textbook trend going on in NZD/CHF, but I think the price isn’t quite right for an entry just yet. Will New Zealand jobs data get me to a more interesting price?

NZD/CHF Uptrend Pullback

NZD/CHF 4-Hour Forex Chart
NZD/CHF 4-Hour Forex Chart

 

Fundies first as always, and between these two currencies I’m more in favor of the Kiwi dollar with recent positive PMI data holding in expansionary mode and a positive surprise in the quarterly CPI reading (+0.4% vs. 0.3% expected).  On the other side, Switzerland has had some positive PMI reads on its own, but consumer sentiment is on the lower end of the spectrum, and let’s not forget the negative interest rate policy from the Swiss National Bank. When you pair up the franc’s overnight rate of -0.75% against the New Zealand dollar’s 2.00%, it’s no contest and it likely explains the broad support for the Kiwi in 2016 despite weak inflation conditions and rate cuts.

That support continues in 2017, but in NZD/CHF it looks like it may be topping out with resistance forming around .7300 on the four hour chart above. I’m up for going with the trend higher, but I’d like to see a pullback before jumping in long.

And I just may get that pullback soon, especially after we just got the latest quarterly employment situation numbers for New Zealand just after the Tuesday U.S. session close. Overall, we’re seeing growth with most metrics, but the unemployment rate ticked up to 5.2% vs. 4.8% previous, which is due to another increase in the labour force participation rate. Let’s see how the market interprets that, but if it does get bearish on the Kiwi in the short-term because of it, I’ll be ready to buy on a retest and hold of the rising trendline on the chart above, connecting the higher “lows.”

So, I’m in watch mode for now, but I’ll ready to hop in if the coming price action meets my criteria.  

Stay tuned and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

Risk Disclosure
Pipcrawler’s Q4 2016 Blog Trading Performance

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