The New Zealand dollar is testing key levels ahead of important Chinese reports next week, notes Matt Weller.
Markets are trading with a slight risk-off tone as we go to press, with the U.S. dollar clocking in as the strongest major currency while the Aussie and kiwi bring up the rear.
Today’s drop in NZD/USD leaves the pair at a particularly interesting level. Rates are testing critical previous support and their three-month lows around 0.6720. A break and daily close below this level (ideally accompanied by a corresponding breakdown in the relative strength index (RSI) indicator) could open the door for another leg lower, with bears potentially targeting the 61.8% Fibonacci retracement of the Q4 rally near 0.6630 next.
Source: TradingView, FOREX.com
From a fundamental perspective, there’s little in the way of direct U.S. or New Zealand data on tap, but China’s mid-month data dump will have a major impact on the kiwi. Readers should keep a close eye on China’s trade balance figure ahead of the weekend, as well as the GDP report over the weekend and Industrial Production figures in Wednesday’s Asian session.
