New Zealand Dollar Forecasts vs the GBP and USD
The NZ dollar has fallen as Chinese Manufacturing data disappoints, however our forecasts suggest weakness could be temporary.
China’s Manufacturing PMI data came in below-par and we are seeing the commodity dollar block weaken again.
The PMI data read at 49.4 and represents the lowest figure since 2012, which prompted falls in the AUD, CAD and NZD.
The commodity dollar complex remains prone to Chinese-inspired risks and the slowdown in the Asian giant's growth remains the number one gateway to a lower NZ dollar in 2016.
Looking ahead, the real excitement for NZD begins on Tuesday, with the first of the two February Global Dairy Auctions taking place.
The final instalment in January saw prices record a 1.4% fall to an average price of 2,405 dollars.
This all important export sector is under stress with global supply remaining robust.
Another above-consensus stumble in dairy prices could hurt the New Zealand dollar substantially and allow the likes of sterling to stage a recovery.
Watch out for employment data on Wednesday - markets are forecasting a quarterly increase in the employment rate to the tune of 0.8%, an improvement on last month’s -0.4%.
Disappointment here could open the doors to potential Reserve Bank interest rate cuts which will notably undermine the NZD’s outlook.
Latest Pound / New Zealand Dollar Exchange Rates
  | Live: 2.3088▼ -0.17%12 Month Best:2.3553 |
*Your Bank's Retail Rate
| 2.2303 - 2.2395 |
**Independent Specialist | 2.2765 - 2.2857 Find out why this is a better rate |
* Bank rates according to latest IMTI data.
** RationalFX dealing desk quotation.
GBP to NZD Forecast
As far as the charts go, the pound to New-Zealand dollar exchange rate has weakened recently to below key support at 2.2000.
In fact we have seen banks offering international payments as low as 2.1339 while independents have been holding closer to the market at 2.1691.
It’s too early to say whether this represents a resumption of the dominant longer-term down-trend or just a pull-back within the new up-trend, which began at the 2.1512 lows.
If it is a resumption, then a break below the 2.1689 lows would confirm more downside to come, to a target at the 2.1512 lows.
Alternatively, if the correction goes higher then it encounters tough resistance in the form of the 50-day MA, 200-week MA and S1 Monthly Pivot at 2.2696, and I would ideally want to see these levels breach before expecting a longer-term recovery to take place, which would be confirmed by a breach of the 2.2800 handle to an initial target at 2.3000.
NZD to USD Forecast
The kiwi-dollar exchange rate has been consolidating on the S2 Monthly Pivot after breaking down from a corrective a-b-c pattern in the midst of the strong long-term down-trend.
The pair could break either higher or lower – whilst the trend is down and expected to continue, Chaikin Money Flow is showing a bullish convergence with price, possibly indicating an upside breakout.
A move below the shooting star lows at 0.6345 would probably confirm more downside to the 100% extrapolation of the height of the previous move before it broke below the trend-line, at 0.6293.
Alternatively, if Chaikin is right and the current consolidation breaks higher, then a move above the 0.6558 Jan 21 highs, would probably lead to a move up to the 50-day MA at 0.6630.
