Economic data on Thursday and Friday
The New Zealand dollar is getting stronger and looks quite steady. It shrugged off the US Fed Chair Janet Yellen comments on the yet possible interest rates hike in the US this year. New Zealand now has one of the highest key rates among the developed countries – at 2.5%. In Australia the rate is 2%, in Norway is 0.75%, in Canada is 0.5%. Will the kiwi continue advancing?
The relatively high interest rate in New Zealand may make the carry trade operations more appealing and increase the demand for kiwi. The country’s economic indicators look positive. The unemployment for Q4 fell to 5.3% from 6%. The GDP growth in Q3 was 2.3%. The January business PMI and inflation are awaited on Thursday and Friday, the outlook is positive. The main risk factor for the kiwi is the possible interest rate cut due to the too positive economic performance but the likelihood of such a move is estimated only at 35% judging by the futures prices.
On the daily chart NZDUSD: D1 is struggling for reentering the previous uptrend. The MACD and Parabolic indicators give buy signals. The RSI indicator has not yet reached the overbought zone but is above 50, no divergence. The Bollinger bands have contracted which means lower volatility. The bullish momentum may develop in case the New Zealand dollar surpasses the last fractal high, the Bollinger band and the 200-day moving average at 0.675. This level may serve the point of entry. The initial risk-limit may be placed below the Parabolic signal, the Bollinger band and the last fractal low at 0.641. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 0.641 without reaching the order at 0.675, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
|Buy stop||above 0,675|
|Stop loss||below 10,641|