The NZD/USD pair rose during the course of the session on Thursday, breaking the top of the hammer that had formed on Wednesday. This of course is a pretty significant bullish sign. We ended up slamming into the 0.85 level, and found it to be a bit resistive. This isn’t overly surprising to me, as the 0.85 level was significantly supportive in the past. On top of that, it is nonfarm payroll Friday and that means that a lot of volatility is about to enter this marketplace. The New Zealand dollar is the least liquid of the major currencies, so this one will be a lot more susceptible to the back and forth type of gyrations that we see on these days.
The candle is bullish though, so a break above the highs from the Thursday session for me is a buy signal. On the other hand, there is the possibility of a break down from here, especially considering that the area has been so important.
Volatile markets, and commodity markets.
I believe that the commodity markets will continue to be a driver of this pair, as you can often see. It’ll be interesting to see how the jobs number of facts the various commodity markets, but also the risk appetite of the markets in general will have to be measured. The New Zealand dollar is an excellent way to do that, so even if you don’t trade this particular market, it could be a good one to pay attention to.
Ultimately, I believe that the end of this day will be very important for how the New Zealand dollar moves next, and with that I believe that the real move will be shown by the way that the daily candle closes. Ultimately, we could see a lot of motion back and forth during the day, and because of that I’m going to avoid trading it in the heat of the moment, but do recognize that the next couple of weeks could be decided in the next 24 hours.
