NZ dollar rises on strong mfg. report

The New Zealand dollar has posted strong gains on Wednesday. Currently, NZD/USD is trading at 0.7093, up 0.75% on the day. The currency sizzled in the month of November, with gains of 6.1 per cent and has continued to add gains in December. Last week, NZD/USD climbed to 0.7104, its highest level since April 2018. With NZD/USD on the move, we could see the pair punch above the 0.7100 line as early as today.

Manufacturing Sales climb

In New Zealand, the focus this week is on the manufacturing sector. Manufacturing Sales excelled in the third quarter, with a gain of 10.0%. This follows a dismal reading of -11.0% in the second quarter. Manufacturing declined substantially in the June quarter, as Covid-19 caused a severe downturn in the economy which led to a sharp fall in industrial activity. On Thursday, New Zealand releases BusinessNZ Manufacturing Index (21:30 GMT). The indicator has remained in expansive territory throughout the second half of the year, with readings above the neutral-50 level.

A key reason for the sharp rebound in manufacturing is the pace of recovery in China, which appears to have emerged from the Covid pandemic. China is New Zealand’s largest trading partner, and key exports to China include milk and dairy products. Stronger Chinese demand has been good news for New Zealand’s export and manufacturing sectors.

The New Zealand dollar continues to take full advantage of a sluggish US dollar, and has soared 15.6% since April 1st. The meteoric ascent could well continue as we wrap up 2021. US lawmakers are trying to bridge the gap and come up with a massive fiscal stimulus program in order to boost the economy. Such a step would likely weigh on the US dollar. As well, the RBNZ appears to have shelved any plans to implement negative interest rates, which would have made the kiwi less attractive to investors. I would not be surprised in the least if NZD/USD continues to gain ground as we approach the end of 2021.

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NZD/USD Technical

  • NZD/USD is pressing on resistance at 0.7092. The next resistance line is at 0.7145
  • There is support at 0.6998, followed by support at 0.6957
  • The 20-day MA is also acting as support, at 0.6978

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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