The NZD/USD pair search of surged higher on the Monday trading session, but fell as we approach the 0.83 handle. This area has caused quite a bit of resistance lately, and it looks like that attitude is expected to continue.
The 0.83 level represents where sellers come in and push the market down. The fact that we formed a beautiful shooting star for the session on Monday only reinforces this fact. However, I don't see the shooting star as some type of great selling signal, rather a sign that we will continue to bounce around between the 0.82 and 0.83 levels.
In fact, I see the 0.82 level is a bit of a floor in this market presently. After all, we have recently broken out above that area, and it should continue to be support as it was once resistance and we are now clear. With the Federal Reserve printing currency the way it is, it's hard to believe the commodities will rise over time. The Kiwi dollar of course benefits from this, and as such should continue to go higher going forward.
My Favorite Commodity Currency
The New Zealand dollar is one of my fair a commodity currency plays. There are several reasons for this, but the most important ones are the fact that this pair is a little less liquid than the Australian dollar, which of course makes it move a bit quicker. Also, the New Zealand dollar tends to react to overall commodity risk appetite as opposed to a specific commodity or two like other currency pairs will use.
Currently, I see the Kiwi dollar is much stronger than the Australian dollar simply because the Reserve Bank of Australia is expected to do a couple of interest rate cuts before the end of the year. We do not see this as a scenario that can help the Aussie dollar against the Kiwi dollar. Both of which however, should continue to do well against the US dollar. This is simply a matter of triangulation, and as a result I think both the AU D/USD and the NZD/USD pair should continue higher. However, I think that the Kiwi dollar will be the better performer due to interest rates staying firm out of Wellington.