NZD/USD rally takes pause

The New Zealand dollar is unchanged in Friday trade. In Friday’s European session, NZD/USD is trading at 0.6837.

NZ dollar enjoying rosy November

The New Zealand dollar has looked sharp in the month of November, posting gains of 3.4% during that time. On Thursday, profit-taking pressure resulted in the currency posting its first losing daily session this month. Still, the currency managed to post a monthly high of 0.6914 on Thursday, its highest level since March 1. The New Zealand dollar has run roughshod over its US counterpart, gaining 14.6% since April 1.

The New Zealand dollar’s rally has been impressive, but at the same time, much of the upswing must be attributed to broad weakness in the US dollar, rather than strength on the part of the kiwi. New Zealand reacted swiftly and has kept Covid-19 casualties to a minimum, but repeated lockdowns have caused a recession. As well, reduced global demand for New Zealand exports has dampened economic growth. The economy contracted by 12.2% in the second quarter and we won’t get a look at GDP for Q3 until mid-December.

Manufacturing, inflation slow in October

New Zealand ended the week with soft October numbers. The BusinessNZ Manufacturing Index slowed to 51.7, down from 54.0 beforehand. This reading indicated slight expansion, just above the neutral 50-level. On the inflation front, the Food Price Index came in at -0.7%, after a decline of 1.0% in September. Low inflation is a reflection of the weak economy, and the most recent CPI (quarterly) release showed an annual inflation rate of just 1.4%, in the year ending in September 2020.

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NZD/USD Technical

  • We find resistance at 0.6891, followed by resistance at 0.6943
  • NZD/USD tested support at 0.6811 in the Asian session. Below, there is support at 0.6783

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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