The Kiwi traded against the Greenback above the 69c handle. This area has been resistance for quite some time. The NZDUSD had an intraday high of $0.6966 after finishing the day at $0.6916. The Kiwi has gained 3.6% against the US Dollar this week and Tuesday alone the Kiwi was higher by 2%. The move higher was indeed off the back of a dovish FED who are now looking to proceed gradually and cautiously when it comes to hiking interest rates. Based on Janet Yellens comments, if need be we may see further quantitative easing and possibly interest rate cuts. Things will need to dramatically deteriorate in-order for this to happen.
There was not much in the way of NZ data this week but we did have building consents on Wednesday which showed a much better than expected read surging 10.8% month-on-month in February making up for the sharp decline in January. Importantly though out this morning is the ANZ business confidence index and what will be scrutinized by the RBNZ will be the inflation expectations component of the survey. If we see a further fall in inflation expectations then we are likely to see further rate cuts.
The only concern for the New Zealand economy are Dairy prices which remain under pressure and have fallen five out of six of this year's Global Dairy Trade (GDT) auctions. Next week the GDT Price aution will be held on Wednesday and let's see if we can get a better performance this time round.
The US Dollar was showing some strength and was testing the 200 Day SMA. Pricing action has now come down to retest previous support at 11,860 and a break of this level will see the US Dollar test the 11,700 level. We are continuing to see lower peaks since February and with the greenback trading below the 200 Day SMA we may see a weaker Dollar. If the FED enlighten us with further commentary on interest rate rises in the coming months we may see a stronger Greenback but I feel there will be a bit more pain for the Greenback before we see a rebound.
Key levels of the NZD/USD to watch out for after breaking quite significantly the 69c resistance level will be the $0.7050 level. We may see the 0.6900 level retested and this is likely because yesterdays candle closed towards the middle of the range. For the Kiwi to reach the $0.7050 level we would like to continue see a higher trough forming and that should give it the momentum to reach the next resistance point.