- During the trading session on Wednesday, we have seen the New Zealand dollar go back and forth, as we are trying to figure out where to go next.
- All things being equal, this is a market that I think will continue to be very noisy, which makes a certain amount of sense considering that the risk appetite around the world continues to fall, and at the same time you have the New Zealand economy being heavily influenced by what’s going on in Asia.
If the global economy is going to slow down, places like Asia get a bit of an outsized amount of pressure, and that will directly influence New Zealand, as its biggest customers are in places like China. Furthermore, we also have to keep in mind that the New Zealand economy has been struggling a bit anyway, and of course if there is going to be a continued “risk off” attitude around the world, then it makes a certain amount of sense that the US dollar will continue to attract a certain amount of inflow against riskier currencies like the Kiwi dollar.
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Are We Still Sideways?
The question at this point in time is going to be whether or not we are still sideways. It certainly looks like that at this point, and the 50 Day EMA offers a little bit of support, but I think we also probably sliced through it without too much effort. After all, the market as sliced through it a couple of times recently, and therefore I think it won’t have as big of an influence as it once did, and therefore I think the flat 50 Day EMA suggests that we aren’t going anywhere.
One level that I pay close attention to is the 0.58 level, and if we can break above there then I think it would be a very bullish sign for the New Zealand dollar. However, I don’t necessarily think that it’s going to be easy to break above that level, so you need to be cautious in getting overly bullish. However, if we were to break above the 0.58 level on a daily close, then it would be a very bullish sign. On the other hand, if we were to break down below the 0.55 level, then it opens up a massive trapdoor of negativity.
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