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May 24, 2021

Kiwi Dollar (NZD/USD)- Deep Dive Market Analysis

Frank Cabibi

Our Outlook

We think the news will be mixed with an overall bullishness to the pair as the USD sinks with inflation. NZD's lower inflation rate of 1.5% is a leg up on the USD. At least in the relative short term, seeing the kiwi gain traction over the dollar looks more possible now that the USD inflation rate looks worse than expected.

Fundamental Analysis

Rate and Policy Statements:

NZD reportedly added jobs in early May which shows a positive change from last quarter at 0.6% and a fall in unemployment rate from 4.9% to 4.7%. Next Tuesday, May 25 will be a big day for the currency with cash rate, monetary policy statement, rate statement and press conference. The pair is already on the rise based off the optimistic sentiment from the RBNZ monetary policy statement tomorrow.

Retail Sales:

Positive retail sales came out on the kiwi yesterday evening reporting better-than-expected numbers sitting at 2.5% growth q/q which was forecasted at -1.8%. This big jump in growth is sales is a great sign for the bulls on this pair, and paired with lower inflation, could boost price higher.

Technical Analysis

NZDUSD 4H Chart

This pair moves similarly to AUDUSD, and we are bullish on that pair. Price may likely find support in the .71400s as it closed under a long term trend line on the 4H chart. Price moved up from lows and is nearing the top of a wedge. Support lies below at .71444 if RBNZ news worries investors. But otherwise, it looks like the pair will at least test resistance on that falling trend line this week.

Retail Sentiment

Retail Sentiment Highlighted in Gold

Retail is majority short even after good retail sales news on NZD. The past month has been an uptrend for the pair, so it would take the big money to sell for us to start getting bearish sentiment.

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