The surprise this week was the strong rise in the New Zealand Dollar.This currency rallied as traders chased the higher yielding Kiwi onspeculation the global economy was on the mend. Technically the weekly trend turned up.
The surprise this week was the strong rise in the New Zealand Dollar. This currency rallied as traders chased the higher yielding Kiwi on speculation the global economy was on the mend. News that China was on the road to recovery is leading traders to speculate the New Zealand economy would soon mount a recovery because of improvements in the demand for exports.
The Kiwi has been the hardest currency to trade lately. Speculators have been driving this market higher while the Reserve Bank of New Zealand has been sending out conflicting signals.
News about the Chinese economy has had more of a bullish influence on the Kiwi than the central bank announcements.
Speculators are betting on an economic recovery while the RBNZ is saying “While the New Zealand economy has not experienced the same extreme falls in economic activity as seen in a number of our trading partners, it remains weak. Business sentiment is low, investment has been curtailed and employment reduced.”
Technically the main trend has just turned up on the weekly chart. Based on the range of .8215 to .4892, the next upside target is a retracement zone at .6553 to .6946. The swing chart indicates that if the rally continues on its current pace, the NZD USD could reach .6572 by the week-ending May 29.