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Aussie Buck or Kiwi? Better Buy

7/22/2021

AUDMore Bullish
NZDLess Bullish

Our outlook

Although both currencies are affected by global events for the most part, the Aussie buck is probably a safer bet considering a few factors around it. First, the buck relies heavily on gold production and is dependent on it performance in the Australian economy. The kiwi is mostly dependent on manufacturing and exporting commodities like milk and dairy products. If there is a slowdown in dairy production or the prices of dairy products declines, so does the kiwi's price.

https://www.globaldairytrade.info/en/product-results/whole-milk-powder/

The continuing decline of whole milk prices since March is not a good sign for New Zealand's economy, and when comparing them to other countries' currencies, they don't really have a bullish argument.

The reason I am still bullish on NZD is because of their announcement to raise interest rates by the end of this year. This is way ahead of the Australian statement that said the RBA will raise interest rates starting in 2023. However, Australia's raw material economy seems like a much better bet in today's global condition of low interest rates and rising inflation in the US, England, Europe and other parts of the world.

https://www.statista.com/statistics/1039391/australia-gold-production-volume/

The image above is a chart of gold production from 2020 to 2021 and forecasts to 2026. As Aussie's economy rebounds and currencies weaken with inflation, gold looks like a good long term bet. And that is good for AUD.

Trade Setups

NZDUSD

NU tests resistance on a falling trend line before retracing and showing rejection from that level. A lower low on the 4H chart suggests that the next move down to create another lower bottom.

AUDNZD

AN hits a double bottom and bounces up .38% on the day. One thing to look out for is the 50 Day and 200 Day moving average intersecting and crossing. If the 50 runs below the 200, it could be a sign that the pair will continue to fall. However, the double bottom has held up pretty well so far.

AUDUSD

Against the USD, the buck doesn't look too strong. Price made a lower low and is now coming up to test resistance coupled with a falling trend line on the 1D chart.

AUDCHF

I like this setups a lot. ACHF is up today after testing a former double top on the 1D chart. Price is now up against resistance and hovering around that level. If price breaks above, it could see a test at the 200 DMA, and if not, will probably test support again.

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