The Pound-to-New Zealand Dollar rate has broken bearishly out of a channel, indicating more downside is probable, whilst New Zealand Dairy prices and UK sector activity data for December constitute the main releases in the week ahead.
The pair has broken out of the rising channel which is usually a bearish sign suggesting more downside is on the horizon.
It is now set to move lower to a target at 1.8560, calculated by extrapolating the width of the channel 'a' down from the break-point down, in a move labeled 'b'.
The MACD momentum gauge is now below the zero-line which is a sign the downtrend is dominant, further supporting the bearish forecast.
Confirmation of further downside would be dependent on a break below the 1.8930 lows.
Data and Events for the New Zealand Dollar
The main data release for the New Zealand Dollar (Kiwi) in the coming week is Global Dairy Prices which are fixed at a fortnightly dairy auction.
Dairy products constitute New Zealand's largest type of export and a rise in prices tends to support the Kiwi, and vice-versa for a fall.
As can be seen on the chart below showing price changes since August most auctions have resulted in a fall in the Dairy product index or GDT as it is known.
Because of the steep decline in Dairy prices, there is likely to be a considerable focus on them in the week ahead when the results of the latest auction are published at 14.20 GMT on Tuesday, January 2.
Data and Events for the Pound
The main release in the coming week for the Pound will be key purchasing manager survey data assessing the health of the three main sectors of Manufacturing, Services, and Construction in December.
These releases are officially known as the PMI (Purchasing Manager Indices) and they are out at 9.30 GMT on Tuesday, December 2 for Manufacturing and Wednesday and Thursday at the same time for Construction and Services respectively.
Manufacturing is expected to have fallen from 58.2 to 58.0, Construction from 53.1 to 52.7 and Services to have remained unchanged at 53.8.
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