- The New Zealand dollar rose during the early hours on Monday, as we are threatening the 0.60 level.
- The 0.60 levelis a large, round, psychologically significant figure, and an area that has seen a certain amount of action in the past.
- That being said, we have to keep in mind that there are 4 central bank meetings this week, and that means that we will get a greater understanding about the overall global economy, which of course the New Zealand dollar is very sensitive to.
Commodity Currencies
Keep in mind that commodity currencies are a little bit different than many others, and of course the New Zealand dollar is a very well-known one. As the New Zealand economy is essentially based on sending to commodities into Asia, perhaps specifically with China, how goes the global economy, so goes the New Zealand economy as they need to be suppliers of the “factories of the world” that we find in Asia.
If there are concerns out there about the global economy, it does make a certain amount of sense that we would see New Zealand dollar settlers into the market as the US dollar is considered to be a “safety currency.” It’s also worth noting that we are sitting just above the 50 Day EMA, and the very flat 200 Day EMA. This is a market that I think will be very noisy, but at this point I think we are trying to find some type of range. If we can break above the 0.60 level, then the next move could be to the 0.6050 level, maybe even the 0.6125 level. On the other hand, if we break down below the 200 Day EMA, then it’s likely that we would go looking to the 0.5850 area, followed by the 0.58 level. I would expect volatility and choppiness over the next couple of sessions.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
