The NZD/USD pair will more than likely have a big move in the next couple of trading sessions. This isn’t anything related to the United States, or even to Auckland. Rather it is all based upon the Greek elections on Sunday. In a nutshell, there is the pro-austerity and the anti-austerity parties running neck and neck in this election, and the markets simply have no way of knowing which way the vote will go. If the anti-austerity party comes out on top, there are going to be a lot of nervous bankers. (Who would have guessed that they would have trading losses like the rest of us?)
The Greeks have been suffering for several years now. The truth is that most people wouldn’t blame them for essentially voting their way out of this mess. The leader of the anti-austerity party (And yes, I am simplifying this quite a bit…) believes, or is at least telling the Greek people, that the European Union won’t throw them out, and will have to renegotiate the terms of the austerity agreement. The EU has said over and over that they terms are non-negotiable. I have news for them: they are, and the Greeks have them over a barrel truth be told. In fact, I think Athens has had the upper hand over Berlin for quite some time as dreams of a unified Europe are waning.
0.78
I know I haven’t talked about the Kiwi much, and that’s the point. It is a risk currency, and will be dictated by what happens in Athens over the weekend. Quite frankly, if there is a “bad” result out of the elections, the Kiwi dollar will have a massive gap form the weekend to the downside. However, if the elections go with the pro-austerity party, the gap could be to the upside.
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There is a real chance this pair sells off towards the end of the day as the traders around the world will want to be flat going into this weekend. Also, there is a cluster of resistive candles just above the 0.78 level going all the way to 0.79 that could be a barrier for the bulls. Stay out of this pair until we see the market’s reaction to the election.