NZDUSD, 240min
The NZDUSD rallied strongly yesterday initially through the 0.70000 level and then higher to 0 .7050 area on the release of strong GDT data. GDT is the Global Dairy Trade auction of nine key dairy products. It’s very important for the NZ economy as rising diary product commodity prices is good for the countries trade balance and export income.
Prices rose 3.8% in the latest Global Dairy Trade (GDT) auction after a 2.1% gain previously. Although markets had been expecting prices to advance at the latest auction, the gain triggered a further advance for the New Zealand currency ahead of a key interest rate decision next week. After prices declined in the first four auctions of 2016, there have been gains in three of the last four releases which will provide some relief over short-term prospects for the industry. Despite the recent recovery, prices remain around 15% lower than the recent peak in September 2015 and over 50% lower than the prices prevailing in early 2014.
The appreciation of the NZD has been significant over the last few days and I can see some weakness if the 0.7000 level fails to hold. The 240 min chart shows the retrace from the upper Bollinger Band overnight and a Target 1 area of 0.6950 (20 DMA) and possibly to Target 2 at 0.6938 (50 DMA).
Alternatively, the higher time frames have strong weekly support and I would look to go LONG (reversal of my SHORT trade) between 0.6965 and 0.6936 with a Target 1 0.7050 and Target 2 0.72025.
Janne Muta
Chief Market Analyst
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