The NZD/USD pair fell during the course of the day on Friday, as the employment numbers on the United States came out stronger than anticipated. Because of this, it makes sense that the New Zealand dollar would sell off against the greenback, quite frankly because there are so many concerns about the commodity markets right now with the value the US dollar strengthening overall. After all, keep in mind that the New Zealand dollars often uses a proxy to the overall attitude on risk and commodities in general. With that, it appears that the 0.75 level above is a bit too resistive, and is I look at it I think we will continue to fall from here.
Do not forget about the Royal Bank of New Zealand…
On top of soft commodity markets, the truth is that the Royal Bank of New Zealand continues to work against the value of the New Zealand dollar in general, and has even gotten involved in the spot Forex market in order to sell off the Kiwi dollar. With that, I have a hard time believing that market participants out there will forget that, and that will make them a bit skittish when it comes to buying the Kiwi.
Even if we get above the 0.75 level which is obvious resistance to me, I think there is an entire zone of resistance above to at least the 0.76 level, if not even higher than that. In other words, I see no way to buy this pair at the moment. The Royal Bank of New Zealand recently stated that they believe “fair value” in this pair is closer to the 0.68 handle, and I think that the market is going to try to get down there. It may take some time, but generally the central banks get what they want over the long-term. I am not willing to go against them, so at this point in time if we break down below the bottom of the range from Friday, I would go ahead and start selling the New Zealand dollar yet again.
