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RBNZ keeps interest rates on hold as expected, sees progress in inflation
The Federal Reserve is also the most important central bank in the world. Create a chart for any currency pair in the world to see their currency history. These currency charts use live mid-market rates, are easy to use, and are very reliable.
This means that in times of risk aversion in the market, the USD tends to appreciate against the NZD even if there’s no monetary policy divergence between the two central banks. NZD/USD as many other major pairs has a correlation with global growth. For the Dollar Smile Theory, the USD appreciates both when there’s a synchronised global slowdown and when the US economy outperforms its peers. On the other hand, when there’s global growth USD weakens and currencies like NZD, AUD, CAD, EUR and so on appreciate against it.
The 10-year US Treasury bond yield stays in the red below 3.7% as markets reassess the odds of a large Fed rate cut, helping XAU/USD push higher. Our currency rankings show that the most popular US Dollar exchange rate is the USD to USD rate. Our currency rankings show that the most popular New Zealand Dollar exchange rate is the NZD to USD rate.
It can be a very good pair to trade when you have a monetary policy divergence between the two central banks backing the currencies, the Reserve Bank of New Zealand (RBNZ) for the NZD and the Federal Reserve (the Fed) for the USD. The best way to trade currencies in general is to have a fundamental idea for direction, which is generally based on macroeconomics such as fxcm review central bank’s monetary policy, growth, inflation and so on, and technical analysis for risk management. For example, let’s say that you view the global slowdown and aggressive Fed as a tailwind for the USD in general. So, you will want to mainly take short positions in NZD/USD. Where can you enter in order to have a small risk exposure but a bigger profit potential? Another thing to remember is that the USD is considered a safe haven currency.
- This is because there’s an expectation of a global recession caused by high inflation and aggressive monetary tightening.
- The Federal Reserve is also the most important central bank in the world.
- It can be a very good pair to trade when you have a monetary policy divergence between the two central banks backing the currencies, the Reserve Bank of New Zealand (RBNZ) for the NZD and the Federal Reserve (the Fed) for the USD.
- It goes up when things look bright and goes down when things look bleak.
- The NZD/USD currency pair, also called the “Kiwi”, tells the trader how many US dollars (the quote currency) are needed to purchase one New Zealand dollar (the base currency).
- The European Central Bank is expected to cut key rates by 25 bps at the September policy meeting.
Finally, you can use the broker trading platform to execute your trades. Most retail brokers let you also trade on MetaTrader 4 or MetaTrader 5, which are two of the most famous and popular trading platforms among retail traders. Most retail brokers offer CFD trading for Forex, although you can also trade NZD/USD via other derivatives like futures or options that trade on exchanges but are more expensive than CFDs. As of now the NZD/USD pair is in a clear and strong downtrend.
New Zealand Dollar / U.S. Dollar
You can trade NZD/USD or any other Forex pair with a broker. Always choose a good, kvb forex reputable, and regulated broker to avoid unnecessary problems. When you open a trading account with a broker, you will have to supply your KYC documents and, once approved, deposit money to be able to trade.
ASSETS THAT INFLUENCE NZD/USD THE MOST
The best times to trade NZD/USD is during the European and North American Session. This is because in the Asia-Pacific (APAC) Session there’s less volume and even though the news for New Zealand is released in the APAC session and can offer good trading opportunities, the movements get extended during the next two major sessions. Along with the Australian Dollar, the NZD has been for many years a traditional vehicle for carry traders, which has made this currency also very sensitive to changes in interest rates. The Xe Rate Alerts will let you know when the rate you need is triggered on your selected currency pairs.
This is because there’s an expectation of a global recession caused by high inflation and aggressive monetary tightening. In such a scenario, commodities prices generally fall and NZD, being a commodity linked currency, suffer losses. In the chart below you can see that the pair has been in a downtrend for several months and it’s expected to keep falling for some others.
Key data points
The candlestick chart shows you instantly and in real time where the price has opened, closed and how much up and down it went on any given timeframe. The European Central Bank is expected to cut key rates by 25 bps at the September policy meeting. ECB President Christine Lagarde’s presser and updated economic forecasts will be closely scrutinized for fresh policy cues. Gold preserves its bullish momentum and trades near $2,580 after setting a new record-high slightly above this level.
To show this correlation, we can take the US ISM PMI, which is correlated with Global PMIs since the US is the biggest economy in the world and compare it with NZD/USD chart. Below you can see how the changes in the ISM PMI (orange line) have an inverse correlation with NZD/USD (blue line). Thus, if you expect global growth to slow down, you may want to look more for shorts on NZD/USD and vice versa if you expect a stable or higher global growth.
Currency exchange rates are important for the respective countries. A weak currency can increase exports and thus growth because foreigners will have a stronger currency and more purchasing power leading to them demanding more goods and services from the country that has a weak currency. On the other hand, when the currency is too strong it increases imports and diminishes exports because foreigners will buy less goods and services because their purchasing power will be weaker. This can create a trade deficit (more imports than exports). NZD/USD is also important as a global growth barometer much like the AUD as the NZD as a commodity currency is sensitive to global growth prospects and it depreciates when growth is expected to slowdown and appreciates when it’s expected to rise. NZD/USD is very similar to AUD/USD and thus the same trading guidelines apply to kiwi as well.
The NZD/USD currency pair, also called the “Kiwi”, tells the trader how many US dollars (the quote currency) are needed to purchase one New Zealand dollar (the base currency). Together with the Australian Dollar and the Canadian Dollar, the NZD is a commodity currency, that is a currency whose country’s exports are largely comprised of raw materials (precious metals, oil, agriculture, etc.). So, you open the NZD/USD chart and use technical concepts like support and resistance, trendlines, Fibonacci ratios, indicators and so on to decide where to open a trade. For example, in the chart below you can see how you could use a simple breakout of the counter-trendline to enter a short position and hold it as long as you expected the fundamentals to be valid. You could place a stop loss above the most recent swing level, so your loss would be little and limited.
Xe Currency Charts
NZD/USD is another FX pair that can be considered as a barometer for risk sentiment. It goes up when things look bright and goes down when things look bleak. In times of stress in the markets and higher volatility, we can generally see the NZD/USD pair falling as the market goes for the safety of the US Dollar and sells off the NZD. Generally, volatility increases in bad times and that’s why you can see the pair being even inversely correlated with the VIX index, which measures the expected volatility for the S&P500 Index which is another risk asset. Below you can see the inverse correlation in the chart.