The NZD/USD pair is one of the most favored commodity currencies for me. The average trader tends to favor the Aussie, and while I certainly trade that currency, the Kiwi can give you much more of a “bang for your buck.” This pair produces much larger moves than the AUD/USD pair under most conditions, and as a result you will find that if both pairs are moving in the same direction – which they typically do – the NZD/USD almost always is the more profitable trade.
The Kiwis are currently suffering at the hands of the rest of us. This country has a major infrastructure rebuild going on after the earthquakes, but the rest of the world is struggling, and this hurts exports out of this nation. While the main exports are agricultural based, the Kiwi dollar tends to follow the overall “attitude” of the futures markets, and is a victim of the same problems as the Aussie and Loonie in that respect. The slowdown in China is working against the Kiwi at the moment, although they don’t send the copper and other raw materials that nation uses for production.
0.75 matters
The gap from the weekend was a rumor fueled move when it started to make rounds that the Europeans were secretly working on a bailout program for the banks on that continent. This of course didn’t get confirmed, and a lot of the rally got turned back as a result. In fact the candle for the session on Monday is a shooting star that is situation at the 0.76 level. The 0.75 level below is obvious support, but the market looks poised to attack at this point. The breaking of this level would signal another push lower as the levee would break at this point.
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The breaking of this level has the market looking for 0.70 eventually, and with all of the headline risks out there, this pair could find it relatively quick. I am selling rallies in this pair and a daily close below the above mentioned 0.75 handle as I believe it would be a serious sign of weakness, yet again.