A1 Trading Company

Ticker tape by TradingView

April 14, 2022

Should You Be Buying Kiwi Right Now?

Frank Cabibi

Over the past couple weeks, New Zealand's kiwi has not been performing to the expectations investors expected. Analysts expected another 25 bp rate hike on Tuesday, but they were surprised by a 50 bp hike that took the interest rate up to 1.50%. So, why isn't NZD taking off right now? Here are some factors for and against buying kiwi.

Reasons For Buying Kiwi

Like the above statements, the Regional Bank of New Zealand decided to push past expectations of the original 25 basis point hike this month. This caused a drastic rise in kiwi's demand followed by a stark sell off in the moments after. A quicker rush to tighten monetary policy could be a good sign for bullish kiwi investors as the currency is outpacing other major countries.

New Zealand is also looking at a potential shift into recovery mode regarding the GDP growth rate. The second half of 2021 actually reported a decline of -0.20% after a significant rise of nearly 18% in the first half of that year. In 2022 so far, their GDP saw a positive rise in the growth rate.

buying kiwi
https://tradingeconomics.com/new-zealand/gdp-growth-annual

If NZ can continue this kind of performance on top of the higher interest rates, it would be hard to find a reason not to consider going long on the kiwi.

Reasons Against Buying Kiwi

Considering the factors above, there is a chance that investors may be worried that the more aggressive monetary stance will start to place hindrances on the economy. Investors want to see economic growth, an increase in spending, etc. However, with much higher interest rates than expected in a shorter amount of time, this could lead to a slow in growth as people stop spending as much and begin saving more.

The Kiwi is also not gaining much institutional interest overall. COT data shows us that big money reduced their long positions while increasing their stakes in contract shorts. Overall open interest was not impressive either, so it seems like institutions are not here to cause any major shifts in direction and we may have to rely on short term retail transactions. Having said that, it looks like retail is mixed.

Kiwi Setups

NZD/CHF

Retail is majority long on this pair as it has been on an uptrend since February. Price has bounced off support on the 1D timeframe, and now it faces resistance around a falling trend line. An important thing to look for here is a break and close above that trend line which would indicate further highs.

NZD/USD

This pair looks like it doesn't have much bullish potential to finishing out this week. Price action on today's candle suggests a further move to the downside as support lies around 0.67114. The overall trend since February is up, however. So, we could see a continuation of this move in the coming months. For the rest of this week, at least, I see the pair moving down to that level of support before finding a bottom.

A1 Edgefinder

#1 Market Scanner Tool
Take 10% off using code "READER"
GET ACCESS NOW
Want to See Our Trades?

Join The VIP Community!

Our entries, exits & analysis
Live Webinar Coaching
Trading Chatrooms
Strategy Library 
Exclusive Trading Guides
Use Code "READER" for 10% OFF!
JOIN NOWJoin FREE Discord
Listen to More Episodes
Get Ready for the Bear Market

Last week’s selloff was brutal for investors in the US stock market: the Dow Jones Industrial Average closed at its lowest level since late 2020, falling to 29590.41, losing 1.6% on Friday alone. With the S&P 500 currently down a whopping 23% from January’s highs this year, and other indexes close behind percentagewise, stock market […]

Read More
Why the New FOMC Decision Matters

Yesterday, the Federal Open Market Committee (FOMC), the Federal Reserve’s policy-making body, implemented yet another 75 basis point interest rate hike. While this move was perfectly in line with market forecasts, Chair Powell’s comments following the subsequent press conference, in which he discussed the FOMC’s new set of economic projections, were significant. He continued to […]

Read More
Shocking CAD Inflation News

Statistics Canada released a surprising new batch of inflation data this morning: month-over-month CPI failed to meet market forecasts, declining by 0.3% instead of the anticipated 0.1%. Rather than being an outlier, the other measurements of CPI mostly followed suit, as both year-over-year Trimmed CPI and Median CPI likewise failed to meet expectations. Trimmed CPI’s […]

Read More
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
Home
Edgefinder
VIP
Menu
homesmartphonelaptopmenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram