Forex Market: NZD/USD daily trading forecast

Friday’s trade saw NZD/USD within the range of 0.6280-0.6332. The pair closed at 0.6317, rising 0.41% on a daily basis, or at the most modest rate since September 2nd, when it appreciated 0.25%. In weekly terms, the cross added 0.54%, following two consecutive weekly declines. It has been the smallest weekly rate of increase since the week ended on August 9th, when the pair went up 0.46%.

At 9:29 GMT today NZD/USD was gaining 0.18% for the day to trade at 0.6328. The pair tested the upper range breakout level (R4), as it touched a daily high at 0.6344 during early Asian trade.

No relevant macroeconomic reports and other events, which may influence NZD/USD trading, are scheduled for today.

Correlation with other Major pairs

Taking into account the week ended on September 13th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:

NZD/USD to USD/JPY (0.4538, or moderate)
NZD/USD to AUD/USD (0.2756, or weak)
NZD/USD to GBP/USD (0.2743, or weak)
NZD/USD to USD/CHF (0.1918, or weak)
NZD/USD to EUR/USD (-0.0440, or very weak)
NZD/USD to USD/CAD (-0.5705, or strong)

1. During the examined period NZD/USD moved strongly in the opposite direction compared with USD/CAD.

2. NZD/USD moved almost independently compared to EUR/USD during the past week.

3. The correlation between NZD/USD and AUD/USD, NZD/USD and GBP/USD, NZD/USD and USD/CHF was insignificant.

4. NZD/USD moved to a moderate extent in one and the same direction with USD/JPY during the period in question.

Bond Yield Spread

The yield on New Zealand’s 2-year government bonds went as high as 2.520% on September 11th, after which it slid to 2.475% at the close to lose 3.5 basis points (0.035 percentage point) on a daily basis, while marking a second consecutive trading day of decline.

The yield on US 2-year government bonds climbed as high as 0.742% on September 11th, after which it fell to 0.709% at the close to lose 2.8 basis points (0.028 percentage point) for the day, while marking a second consecutive trading day of decrease.

The spread between 2-year New Zealand and 2-year US bond yields, which reflects the flow of funds in a short term, shrank to 1.766% on September 11th from 1.773% during the prior day. The September 11th yield spread has been the lowest one in more than three months.

Meanwhile, the yield on New Zealand’s 10-year government bonds soared as high as 3.335% on September 11th, after which it slid to 3.295% at the close to lose 1.5 basis points (0.015 percentage point) compared to September 10th, while marking a second straight day of decrease.

The yield on US 10-year government bonds climbed as high as 2.226% on September 11th, after which it slipped to 2.187% at the close to lose 4 basis points (0.04 percentage point) on a daily basis. It has been the first drop in the past five trading days.

The spread between 10-year New Zealand and 10-year US bond yields expanded to 1.108% on September 11th from 1.083% during the prior day. The September 11th yield difference has been the largest one since September 9th, when the spread was 1.160%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for NZD/USD are presented as follows:

R1 – 0.6322
R2 – 0.6327
R3 (range resistance) – 0.6332
R4 (range breakout) – 0.6346

S1 – 0.6312
S2 – 0.6307
S3 (range support) – 0.6303
S4 (range breakout) – 0.6288

By using the traditional method of calculation, the weekly pivot levels for NZD/USD are presented as follows:

Central Pivot Point – 0.6330
R1 – 0.6418
R2 – 0.6520
R3 – 0.6608

S1 – 0.6228
S2 – 0.6140
S3 – 0.6038