NZDUSD NZD/USD

NZD/USD is another popular currency that is used in trading and it is very close to AUDUSD charting almost the same price curves. The other name for the New Zealand Dollar is the Kiwi, which is also a small bird and the symbol of New Zealand. It is one of the major currencies in the market. The economy of New Zealand is highly respected worldwide despite being just 1% of the size of the U.S. economy. The population of the country is around 5.2 million people and it mostly exports food and other agricultural products. The NZD/USD has some specific features:
- The trading runs on high liquidity, making the technical analysis of NZD/USD quite accurate. However, the Greenback dominates this pair. Thus, Dollar-related drivers should be monitored very carefully, including U.S. macroeconomic data on GDP, inflation, important political issues, and the actions of the Federal Reserve;
- The Kiwi is an export-driven currency and it is sensitive to agriculture commodity prices. Food and related products form around 60% of the country’s exports. Dairy products are the largest export of News Zealand as it amounts for 29% of total exports, meat products take second place with 14%, fruits, beverages, and other foodstuff are responsible for 16% of exports. The Global Diary Trade index could serve as a leading indicator for NZD/USD price changes;
- As it is a commodity-driven currency, the Kiwi is a risky asset. Rising appetite for risk, improving stock market sentiment, economic recovery, declining interest rates, and a rising stock market favour the strengthening of the Kiwi. Otherwise, it will put pressure on the currency. The CBOE Volatility Index (VIX) could serve as an indication of this sentiment. The more the index climbs, the worse for the Kiwi;
- NZD/USD has a high correlation to AUD/USD due to the close proximity of both countries and economic connections. Australia also exports food. So, a trader should also consider economic development in the country that could affect the Kiwi;
- New Zealand has a close trade relationship with China, which is also true for Australia. New Zealand has 28% of it exports shipped to China, while 23% of its imports come from China. The strengthening of China’s economy is positive for the Kiwi, while a slowdown is a negative factor;
- The Kiwi is most actively traded during night-time in Europe. Economic data that is related to the Kiwi is also released during nighttime. So, elevated volatility is likely to emerge during that time in case of a market-moving event.