NZDUSD gained a bit more ground last week, boosted primarily by a rise in gold prices. The rate initially started Monday off with a firm tone, but then weakened after news that New Zealand Inflation Expectations were softer at 2.6% for the quarter compared with the previous 2.8% reading. This softened the rate down to a test of the important psychological 0.7000 level that was then later broken on Wednesday as the pair traded down to its weekly low point of 0.6945.

The price of gold then rallied sharply on the back of the Ireland debt downgrade by S&P which saw NZDUSD then reverse to trade higher in sympathy with the Aussie, despite the absence of any notable data releases coming from New Zealand.

Thursday also saw NZDUSD continue to rise sharply in spite of rather positive U.S. Initial Jobless Claims numbers.

On Friday, NZDUSD traded to its weekly high point of 0.7128 before then selling off just a bit to close the week near its highs at 0.7120, and showing a gain of 0.7% for the week overall.

Fundamental Outlook for NZDUSD

The primary market-moving economic data releases and policymaker speeches scheduled for this week in New Zealand and the United States are as follows:

New Zealand:

The upcoming week of economic data due for release in New Zealand is again quite quiet, but it does feature the important NBNZ Business Confidence survey results due out on Monday (last 27.9).

Also out on Monday is the New Zealand Trade Balance (-28M), while Tuesday offers Building Consents (last 3.5% m/m).

Wednesday ends the week with the release of ANZ Commodity Prices (last -0.8% m/m) since Thursday and Friday have nothing significant due out.

United States:

The coming week of economic data releases for the United States heats up again, offering some interesting data for forex traders on the U.S. economy. The U.S. economic calendar features key employment data that includes Non Farm Payrolls and the U.S. Unemployment Rate that are both due out on Friday.

Monday starts the active week off with the release of Core PCE Price Index (0.1% m/m), Personal Spending (0.4% m/m) and Personal Income (0.3% m/m). In addition, a speech by FOMC Member Bullard is scheduled in St. Louis.

Tuesday has the S&P/CS Composite-20 HPI (3.7% y/y), the Chicago PMI (57.5), the CB Consumer Confidence survey (50.9), as well as the important FOMC Meeting Minutes.

Wednesday offers Challenger Job Cuts (last -57.2% y/y) and the important ADP Non-Farm Employment Change (20K) that might provide a clue to Friday's major numbers. In addition, Wednesday has scheduled ISM Manufacturing PMI (53.3), ISM Manufacturing Prices (55.8), Construction Spending (-0.4% m/m) and Total Vehicle Sales (11.6M).

Thursday features has the important weekly Initial Jobless Claims (477K), as well as Revised Nonfarm Productivity (-1.9% q/q), Revised Unit Labor Costs (1.4% q/q), Pending Home Sales (-1.5% m/m) and Factory Orders (0.5% m/m).

Friday will provide the weekly highlight since it features the key Non Farm Payrolls data (-101K) and the U.S. Unemployment Rate (9.6%). Also due out on Friday are ISM Non-Manufacturing PMI (53.6) and Average Hourly Earnings (0.1% m/m).

Technical Outlook for NZDUSD

On the technical front, after beginning last week close to its high point, NZDUSD then took a nose dive to hit its weekly low at 0.6945 which had not been seen since early July on Wednesday. The rate then came back considerably to make its weekly high at 0.7128 in Friday's trading session before closing only slightly lower at the 0.7120 level, down 0.7% on the week overall.

Furthermore, NZDUSD managed to sustain its recent losses last week below the rate's previous rising trend line that is now drawn at 0.7298 and which should cap gains for the downside scenario to prevail.

Also, NZDUSD now seems to be retracing its upward move from 0.6560 to 0.7394, having already broken its 23.6% retracement level at 0.7197, its 38.2% level at 0.7075 and briefly penetrated below its 50% level at 0.6977. Provided that the key 61.8% level at 0.6879 still continues to hold, further upside may result; however, once below that important level, the 100% level at 0.6560 would beckon.

Nevertheless, the most recent low in NZDUSD at 0.6945 made a slightly lower low on the key 14-day RSI indicator, thereby supporting the possibility of further downside action for the rate. The key indicator currently has a reading in the central part of neutral territory at 47 that should not present an impediment to a move in either direction.

In addition, while trading below it most of last week, NZDUSD once again rose and closed above the level of its 200-day Moving Average that now comes in at 0.7084. The indicator is now very slightly downward sloping after previously being positively sloping. This gives a neutral medium term outlook for the pair.

NZDUSD closed last Friday at 0.7120, and support for the rate is now seen on the charts in the 0.6994/0.7000 region - right around the key psychological 0.7000 level, as well as in the 0.6945/85 and 0.6793/0.6823 regions and at 0.6571. Resistance shows up in the 0.7080/0.7128 and the 0.7180/89 regions, and above those congestion regions at the 0.7264 level.

This technical scenario tends to indicate a neutral medium term outlook for NZDUSD, and the shorter term picture would suggest range trading between support at 0.6945 and resistance at 0.7189 in the near term until a fresh direction is established.

Note: Past performance is not indicative of future results.

Figure 1: Daily candlestick chart of NZDUSD showing its 200-day MA in red, Bollinger Bands in green, Fibonacci Retracement levels in royal blue, Trend Lines in purple and the 14-day RSI in the indicator box in pale blue.