The New Zealand dollar initially rose at the open, but has since seen a lot of back-and-forth trading, as rates continue to be an issue overall.
NZD/USD
The New Zealand dollar initially drifted a bit higher right at the open here on Monday, gapping to the upside and then just fell from there. This is a market that is heavily influenced by external factors, and will remain a bit at the mercy of those forces.
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We went negative for a while, and we have since broken just barely above break-even. This is a market that's hanging around the 0.59 level, an area that could be thought of as basically the middle of a larger consolidation zone between 0.61 and 0.57. This is essentially fair value according to that.
The little bit of a bounce suggests to me that we're at least not seeing a major runaway US dollar at the moment, but the 10-year yield just broke 4.75%, and that could end up being a problem later.
Technical Range and Yield Pressures
There's a huge cluster of volume in order flow just below the 0.59 level based on the charts, and of course, we just recently had that golden cross. All things being equal, I think we just shied away from the 0.60 level, the top of most of the range for the last few months.
So, I'm actually kind of bearish on this market. As long as those rates in America continue to drift higher, I think that weighs against the New Zealand dollar and many other currencies for that matter.
Ultimately, if we break the 0.60 level, then it changes the outlook here. We probably go looking to 0.61. But I think in that environment, you probably have the US dollar falling against almost everything; it's probably not just here. It's more a market-wide phenomenon.
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