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NZD/USD: Fundamental Review & Forecast

Published on: 10/03/2017

The New Zealand dollar in the last month has not been feeling well. If a month ago the cost was $0.73, now it is just $0.69, and perhaps this is not a border. There are a few factors not in favor of the NZD and the New Zealand economy at all. First of all, the strengthening of the U.S dollar which puts pressure on all currencies: it is expected that next week the Federal Reserve will increase the rate, which has been confirmed by the members of the Fed, so the market already counted a rate hike in the rates of currencies. Furthermore, statistics about the unemployment rate have had a positive impact on the dollar - the number of applications for unemployment allowances decreased to the level from 1973, and the number of people employed in the private sector increased by 298,000, which is 100,000 higher than expected. In addition, the world prices for dairy products decreased, particularly powdered milk, which decreased in price by 6-10%. The long-term forecast is of a decline of 5-7%. Another important factor is the Chinese economy: the consumer price index in February was only 0.8%, significantly less than the forecasted 1.9% and the previous value of 2.5%. Disappointing data related to the Chinese economy has had a negative effect not only on the New Zealand dollar, but on the Australian currency as well.

NZD/USD daily chart

On the daily NZD/USD chart, we can see the rates are in the frames of an uptrend which is obviously ending. It is forming a new downtrend, and considering several factors, it will continue in the near future. The volatility of the NZD/USD rates has increased significantly and it is necessary to take into account when trading, especially if you're a beginner. The Stochastic oscillator signalized the time to open the deals to Buy. This is the right solution in short-term trading. Profit can be received on the price correction which is expected in the coming days.

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