NZD Weekly Forecast

New Zealand’s trade balance report:

Around late Monday U.S. trading and early Tuesday Asian session New Zealand will print its December trade data. 

Market players are expecting the deficit to calm down from 1193M NZD to 125M NZD. A quick look at the historical  tells me that the report is just as likely to surprise to the upside as it is to the downside, so make sure y all are glued to  the tube during the release.

New Zealand's weak CPI and risk aversion  did a number on Kiwi's strength last week. will the com doll recover this week?

China’s manufacturing reports

 Not an hour after Australia's CPI release china is scheduled to print its official manufacturing and  services PMIs, followed by a private reading (Caixin's) the next day.

The manufacturing PMI  is expected to inch lower from 51.6 to 51.5 in January, while Caixin's reading is expected to maintain its 51.5 figure.

Last Week’s Price Review

The Kiwi is the second worst-performing currency of the week as of 8:00 am GMT. And just one glance at the overlay of NZD  pairs below can tell you why.



The Kiwi was actually a net winner from Monday to Wednesday, very likely because of the prevalence of risk appetite at the time. 

 However, the Kiwi had an unfortunate reversal of fortune when New Zealand's 04 2017 CPI report was released since it revealed that headline inflation only increased by 0.1% quarter-on-quarter, missing expectations for a 0.4% rise (+0.5% previous. More importantly, it missed the RBNZ's forecast that CPl
would climb by 0.3% quarter-on-quarter.


weakest reading in four Quarter.And it also missed the RBNZ's forecast that CPI will grow by 1.8% year-on-year.
Given the misses, the market very likely thought that the RBNZ  is no longer on track to hiking by
June 2019, which is likely thought why the bearish reaction to the disappointing CPI report was so strong

on a daily chart, NZD/USD continues pushing higher since completing an inverse head and shoulders pattern in mid-December: since then, the pair has climbed more than 8.5%. 

In addition, the  pair seems to have  formed a shooting star candlestick following the weaker inflation outcome. such a candle is a sign of indecision that may turn out to be a bearish signal.

However, it does need follow-through for confirmation. From here, the 76.4% Fibonacci retrenchment around 0.7374 stands in way as immediate resistance.

A push above that will trend line from early December stands in way as close support.

A break below that will expose the 61.8% level around 0.7261. 

That wasn't the end of the Kiwi's suffering, though since the Kiwi got a  final bearish kick during Thursday's late London session, very likely because risk sentiments turned sour after the ECB statement.

                                                                                                                                                                            Source:babypips