Even though NZDUSD looked quite bearish for last week, the bulls were relentless and managed to push the price higher setting another annual high at 0.8700 from which it retraced a bit and closed the week at 0.8650. The one and only macroeconomic indicator for New Zeeland last week proved to be essential for bulls’ justification of raising the quotation as the trade balance came at the highest level since May 2011. As a result, the price itself was again pushed towards the highs of 2011.
These events made the governor of the central bank to react and to say that having into consideration the promising recovery New Zeeland economy is having and that exports are hurt by the strength of the NZD, we may see further interest rate hikes this year.
Building Consents m/m (10:45 GTM)-Sunday. This is a leading gauge of future construction activity because obtaining government approval is among the first steps in constructing a new building. It follows that this indicator measures the change in the number of new building approvals issued. Also, it is a medium impact indicator and lately it had fluctuant values. In February it was -8.3%, so it will draw some attention from the investors.
ANZ Business Confidence (1:00 GTM)-Monday. This one is a high impact indicator and it is very important for the New Zeeland economy. It represents an index based on surveyed manufacturers, builders, retailers, agricultural firms and service providers. In the last five months, this indicator was on an ascending route as the February value was the best one since 2010. This means that you should keep an eye on it as it will create some serious volatility.
ANZ Commodity Price m/m (1:00 GTM)-Wednesday. It measures the change in the global price of exported commodities. It has a low impact on the markets because the tightly-correlated Australian commodity prices are usually released a few days earlier. For the last three months, the readings were in the positive territory.
Support: 0.8600, 0.8500
Resistance: 0.8700, 0.8800
The daily chart paints a bearish picture again, but this time I think is more powerful and it will eventually lead to the correction the bears expect it. The RSI oscillator gives a bearish divergence as the highs of the technical indicator are in a downfall while the price makes a higher high. The MACD Histogram tells us the same story as the moving averages bounce around the same level, the histogram shows us how the power the bulls have is decreasing while the price is going higher. The third bearish argument is the formation of a rising wedge, a bearish pattern. It is not by the book the way it has been drawn, but it adds up to the bearishness. The conclusion of these signals is that the ascending trend is getting tired and the price rise just by inertia and we could expect to a correction.
Support: 0.8600, 0.8500
Resistance: 0.8700, 0.8750
The hourly chart presents us a minor ascending trend that yet has to be confirmed. The price closed exactly at the level of the previous low and the candlestick is a bearish one. So, if Monday the quotation closes below the 0.8600 level it could be a very compelling indication that the ascending trend is invalidated. The RSI and MACD already had the evolution I expect to have it on a daily chart as well.
Bullish or Bearish
The signals are pretty clear and they point towards a bearish outlook which is translated by a correction. Whether it happens next week or after two weeks from now, the upward movement does not look well at all. The bears seem to be preparing for taking the control while the bulls would like to take some profits. Of course, it would not be a surprise if this ascending movement would continue next week, which would make the correction even painful for the late bulls.