The rates continue within a downtrend, although we have observed signs of a reversal since August. In general, there is an uncertain situation and a confrontation between two strong currencies, because on the one hand, the dollar is strengthening, amid the perspective for an increase in the interest rate in 2022, an increase in the yield of securities and excellent macroeconomic reports, but on the other hand, the New Zealand dollar also has a lot of incentives for growth. As a result, we can see that in the three weeks from October 20 to November 10 the resistance line shifted upwards and was tested daily.
This week the USD still turned out to be stronger: reports on retail sales in the US, as well as data on industrial production volumes turned out to be better than expected. The construction sector has not failed either, because the number of construction permits issued was above the forecasts in October. This strengthens investors' confidence in an upcoming interest rate hike.
The New Zealand dollar was forced to retreat in opposition to the strong USD, although China's macroeconomic indicators improved in industrial production output. However, the most important event for the NZD is ahead because on November 24 there will be a RBNZ meeting, at which, where a rate hike is looking very likely on the background of high inflation and low unemployment. This should certainly strengthen the position of the NZD, so the question of a trend reversal in its favor is still relevant.
Most technical analysis tools indicate the effectiveness of the deals to SELL. However, next week might be the time for an NZD recovery. All investors' attention will be focused here from November 24. The rate is expected to increase by 25 pips. Also next week, the trade balance in New Zealand will be published. Therefore, following the signal of the Stochastic oscillator, we are opening the deals to BUY today, in anticipation of the growth of the rates in the middle of next week.
