Kiwi strengthens on rise in price of whole milk powder

April 6, 2017
Kiwi strengthens on rise in price of whole milk powder August 9, 2018 Clive Nelson https://plus.google.com/110107075468979879828/

New Zealand saw a trade deficit of about $18 million in February due to a decline in the price and export volumes of dairy products. The market had expected a surplus of $127 million. The trade deficit weakened the Kiwi dollar against the Yen.

The political uncertainty in the Europe, failure of Trump to repeal Obamacare and Fed’s less hawkish tone also aided the Yen to gain against the New Zealand dollar. Since March 1st , the NZD/JPY pair had fallen nearly 400 pips to a low of 76.91. We anticipate a reversal from the current level of about 77.20 due to the facts provided below.

In the dairy auction conducted in New Zealand, on Tuesday, the global dairy index rose 1.6%, resulting in an increase in the average price of dairy products to $3,005 per ton. In particular, the price of whole milk powder, which constitutes a major portion of New Zealand’s exports, increased 2.4% to $2,924 per ton.

TRT World

Between November and March, exports of fruits from New Zealand declined about 39%. The decline had a negative impact of 2.8% on the trade balance. However, Nick Tufley, economist at Commonwealth Bank of Australia, is of the opinion that the situation would change soon considering the overall strength of horticulture sector.

On Tuesday, the Bank of Japan reported a 0.1% y-o-y increase in the core consumer price inflation in March, versus a 0.2% rise in the previous month. Analysts had expected the core CPI to increase 0.2%. In the US, the Bureau of Economic Analysis stated that the trade deficit has narrowed in February 2016. The combination of narrow trade deficit in the US and poor CPI data from Japan would have a negative impact on the Yen. Thus, considering the above details, we forecast a rally in the NZD/JPY pair.

Technically, the stochastic indicator, with a reading below 20, indicates an oversold scenario. Minor support exists for the NZD/JPY pair at 77.10. Similarly, 78.10 and 79.40 acts as major resistance levels. So, a trader can expect the New Zealand dollar to rally against the Yen.

NZD/JPY Pair: April 6th 2017

NZD/JPY Pair: April 6th 2017

By purchasing the New Zealand dollar in exchange of the Yen, at 77.20 levels, a trader can gain from the impending rally. To reduce risk, a stop loss order can be placed below 76.40. If the pair rises as forecasted, then the long position can be sold near 79.40.

From the numerous contracts offered by a binary broker, a call option or its equivalent, having an expiry period of one week, can be purchased. The investment can be made when the NZD/JPY pair trades at about 77.20.

About the Author

Clive Nelson

Clive Nelson Author

Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.


Related Articles

British Banks Could End Up Battling Forex Lawsuits From UK Investors

Some of the biggest banks in the United Kingdom have been in the news this year for malpractices that violated

Aussie Down on concerns over high debt-GDP ratio of China

Political uncertainty in Europe due to the upcoming elections in France, steep rise in the price of iron ore, and

Greenback remains weak against the Yen on economic woes

The unabated march of the Japanese Yen against the US dollar continues to rattle the equity markets this week. The