Our suggested NZDUSD long position is one that we recommended yesterday on DailyFX+, and given the drop in Kiwi on Friday, the trade looks even better and offers traders the opportunity to benefit from the high yield the New Zealand dollar offers.
[B] NZD/USD – The Pair to Short-Term Range Trade[/B]
[B]
Trading Tip –[/B] Our suggested NZDUSD long position is one that we recommended yesterday on DailyFX+, and given the drop in Kiwi on Friday, the trade looks even better. This trade is similar to an AUD/USD recommendation issued on Wednesday, but since the Aussie trade violated our risk parameters, we are left to trade the same general setup without doubling our exposure to commodity currency trends. What’s more, in comparing the setup between the two pairs, NZDUSD actually looks to be better equipped for a range trade given both technicals and the upcoming event risk. Technically, the pair is in a long-term uptrend, and our strategy looks to align itself to this dominate trend with a ‘cheap’ entry. And, while it can be argued we are in a wedge, the more likely resolution is for an upside breakout given this trend. To lower risk, we will cancel any open orders by the close of Wednesday or if spot hits 0.8065 before we are entered long.
[B]Event Risk New Zealand and US
[/B]
[B]New Zealand –[/B] Putting a relatively light week for event risk behind it, the New Zealand economic docket will start to fill out with actual market moving indicators over the coming days. For the near-term, there is lingering event risk in the REINZ report for housing sales through February. This indicator, with no solid release data, has the capacity to alter the kiwi’s course as housing is one of two components that have kept a consistent hawkish policy stance from the RBNZ’s Bollard. Next week, a 2Q Manpower survey forecast and 4Q Terms of Trade index present indicators deemed derivative of and inferior to the employment and current account numbers. Wednesday evening builds up the pressure with business PMI and retail sales report. The spending habits of consumers and businesses will not only provide the first inklings of 1Q growth, but it will also offer a preliminary gauge of inflation pressures. Finally, Thursday’s 4Q manufacturing report will tell policy makers whether commodity demand will offset high rates and expensive currency.
[B]United States –[/B] While non-farm payrolls may be out of the way, US dollar event-risk traders will have much to work with in the coming days. The trade balance has had limited effect on price action for some time, and the January reading will likely be no different – though there may be some interest in seeing whether a cheap dollar is helping exports. Thursday’s February retail sales print could be a big mover if there is any suggestion that consumers were not contributing to growth. Finally, Friday’s CPI and preliminary U of Mich. confidence reports will retest modest headline inflation and souring sentiment.
[B]Data for March 7 – March 14[/B]
[B]Data for March 7 – March 14[/B]
[B]Date[/B]
[B]New Zealand[/B][B] Economic Data[/B]
[B]Date[/B]
[B]US Economic Data[/B]
Mar 6-12
REINZ House Sales (FEB)
Mar 11
Trade Balance (JAN)
Mar 12
Business NZ PMI (FEB)
Mar 13
Advanced Retail Sales (FEB)
Mar 12
Retail Sales (JAN)
Mar 14
Consumer Price Index (FEB)
Mar 13
Manufacturing Activity (4Q)
Mar 14
U. of M. Consumer Confidence (MAR P)
[I][B]Written by John Kicklighter and Terri Belkas,[/B] Currency Analysts for Dailyfx.com[/I]
[B][I]To contact Terri or John on this or other articles that they have authored, email at <[email protected]> or <[email protected]>
[/I][/B]