Nov 08, 2022

VOT Research Desk

The New Zealand Dollar in general, 2022 has been a tough year. The USD remains strong, but ANZ economists predict that the NZD will do better in 2023.

While it is hard to predict when geopolitical threats will diminish, we do anticipate that USD dominance will gradually decline as the US economic cycle itself matures.

The RBNZ is anticipated to increase interest rates by 75 basis points at its next two meetings, while the Fed is anticipated to moderate the rate of increases, giving the NZD room to reclaim some lost territory.

Large external imbalances exist in New Zealand. The fact that the deficit is expected to decrease over 2023 as foreign tourism returns (from a near-zero base) does lessen a negative in the equation for the NZD, however markets often consider this as more of a risk factor than a cause to aggressively sell the NZD.

The difference between the NZD’s current level and fair value, which is now at 0.65, is another weapon in the currency’s arsenal. According to our projections, this disparity will gradually close over the next quarters, bringing the NZD to fair value by the end of 2024.

Oct 25, 2022

VOT Research Desk

NZD/USD resumes its upward trend with an eye toward the crucial resistance line that yesterday’s bulls were unable to overcome.

In doing so, the Kiwi pair renews its intraday high at 0.5715 while rebounding from the intersection of the 21-DMA and 10-DMA to aim for the August 12 declining trend line resistance at the latest, around 0.5745.

The buyers are all set to overcome the immediate obstacle surrounding the mid-0.5700s given the positive MACD indications and the stronger, but overbought, RSI (14). The monthly peak at 0.5815 and the round number 0.5800.

However, may serve as further upside filters to restrain the NZD/USD bulls before ceding control.

The psychological magnet of 0.6000 and the previous monthly high of 0.6162 may then catch the market’s eye. Pullback moves, however, are still difficult to make till the quotation advances past the aforementioned DMA confluence of 0.5660-65.

A support line that slopes up from October 13 and is located at 0.5630 is another obstacle for the NZD/USD bears to overcome.

One cannot completely rule out the possibility of seeing a new 2022 bottom, which is now trading at 0.5510, should the pair sellers breach the 0.5630 support.Overall, the NZD/USD pair seems willing to challenge the two-month-old negative trend, but the journey will be difficult and drawn out.

Oct 18, 2022

VOT Research Desk

New day, new opportunities for NZD/USD. On Monday, the price of the currency moved up three levels, and as a result of the CPI data, the rise in Asia was prolonged.

The pair is now within striking distance of Friday’s highs above 0.5680.A break of structure around 0.5651 is necessary if there are to be any chances of a significant correction into level 2 and 1 longs for the following day.

At this point, the price is beginning to collapse on level 3 on the new day and range. The market’s present structure and the week’s preliminary template are shown in the following.

After a Monday rally, the price is now beginning to encounter resistance in the new 50 pip box (day and session range) on level 3 on Tuesday. The price is challenging the last higher low of the Asian rally at 0.5651 on level 2, breaking below the CPI highs and the M-formation, which is a topping pattern.

If the bears maintain control, chances of a slip off of the front side of the trendline will increase with time.

Oct 05, 2022

VOT Research Desk

The Reserve Bank of New Zealand announced a rate increase of 50 basis points, in line with market forecasts, which helped the New Zealand Dollar gain some momentum. This increased the RBNZ’s official cash rate (OCR) to 3.5%, the highest level since the beginning of 2015.

 Following the Reserve Bank of Australia’s (RBA) unexpected dovish boost earlier this week, traders found respite, and the NZD/USD exchange rate immediately reacted by moving higher. Surprisingly, the RBNZ was hawkish in its statement:

“At this meeting, the Committee debated whether to raise the OCR by 50 or 75 basis points. Some participants emphasized that a bigger increase in the OCR today would lessen the necessity of a higher peak in the OCR.”

AUD/NZD Analysis Report

Early trading in the Asia-Pacific region saw AUD/NZD marginally higher, but prices quickly turned downward, setting the pair up to decline for a third session.

While risk reversals for AUD/NZD remain positive, suggesting increased demand for currency futures calls, the similar indicator for NZD/USD improved before today’s decision, albeit still being negative.

Similar to the US, supply-side economics limitations are pressuring New Zealand’s authorities to boost interest rates to unfavorable levels at the expense of genuine economic development.

Furthermore, it’s very probable that the RBNZ won’t significantly veer from its rate-hiking track without first observing a severe weakness in the labor market. Nevertheless, there are a number of variables that affect terminal rates, some of which are outside the RBNZ’s control, such as commodity prices.