Key Highlights
- The New Zealand Dollar after trading as low as 0.7223, formed support against the US Dollar and recovered well.
- There was a break above a major bearish trend line at 0.7300 on the 4-hours chart of NZD/USD.
- New Zealand’s Producer Price Index Output rose 1.3% (QoQ) in Q2 2017, more than the forecast of +0.7%.
- Today, the US Industrial Production figure for July 2017 will be released, which is forecasted to increase by 0.3%.
NZD/USD Technical Analysis
The New Zealand Dollar likely formed a bottom near 0.7220 this week against the US Dollar. The NZD/USD pair is back in the bullish zone and might soon face sellers near 0.7350-0.7390.
The pair recently made a nice upside move and cleared the 23.6% Fib retracement level of the last decline from the 0.7558 high to 0.7223 low. Buyers also succeeded in breaking a major bearish trend line at 0.7300 on the 4-hours chart.
The pair might continue to move higher towards 0.7350. The next major resistance is near the 200 simple moving average (H4) and the 38.2% Fib retracement level of the last decline from the 0.7558 high to 0.7223 low at 0.7351.
Above 0.7351, the next hurdle is near the 100 SMA, which is just below the 50% Fib retracement level of the last decline from the 0.7558 high to 0.7223 low.
On the downside, the broken resistance at 0.7300 may now act as a support if the pair corrects lower.
New Zealand’s Producer Price Index
Recently in New Zealand, the Producer Price Index figures for Q2 2017 were released by the Statistics New Zealand. The market was looking for the PPI Output to increase by 0.7% compared with the previous quarter.
The actual result was above the market expectation, as there was an increase of 1.3% in the output index. Similarly, the Input index rose 1.4%, more than the forecast of 0.9% and higher than the last +0.8%.
The report pointed out that:
In the June quarter, meat product manufacturing and dairy product manufacturing rose 6.9 percent and 3.4 percent respectively. Dairy cattle farmers also received higher prices (up 5.8 percent), due to higher farm-gate milk prices.
Overall, the NZD/USD might continue to gain pace, but likely to face strong offers near the 0.7350-0.7390 resistance zone.
Economic Releases to Watch Today
- US Initial Jobless Claims – Forecast 240K, versus 244K previous.
- US Industrial Production July 2017 (MoM) – Forecast 0.3%, versus +0.4% previous.
- US Capacity Utilization July 2017 – Forecast 76.7%, versus 76.6% previous.
