Increase in Dairy Prices Turns New Zealand Dollar Bullish

New Zealand DollarOn 10th of October 2016, we had recommended going short in NZD/USD pair near 0.7180 price level. For traders in the binary options market, we had suggested buying one touch put option with target level more than 0.7030. Within 5 trading days, the target was achieved.

It is surprising to note that even after hitting the mark of 0.7030, there is a reversal in the currency pair and it touched a high 0.7180. So does this mean that there will be an upward trend of shrinkage in the target level? For determining the probable trend, it is important to study the recent geopolitical and economic news pertaining to the currency pair NZD/USD.

Statistics New Zealand announced on Tuesday that there will be an increase of 2% in the consumer prices for the quarter that ended in September 2016. As compared to the previous quarter, the market was expecting that CPI or Consumer Price Index will remain flat. There is an increase of 0.4% in the CPI reading for the 2nd quarter. This anticipated rise in the inflation rate is likely to strengthen the Kiwi Dollar.

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The analysts are divided in their opinions after the CPI data and it is highly anticipated that the Reserve Bank of New Zealand will be looking forward to a rate cut in November 2016. It has certainly given a window of opportunity for the speculators in order to build a long position in kiwi dollar. The Global Dairy Trade or GDT Index’s reading jumped to 1.4% in the dairy auction which was conducted on the evening of Tuesday in New Zealand. The dairy products account for the major export revenue in New Zealand and it increased to $2,964 per ton. The spike in the price of dairy products will certainly strengthen the New Zealand dollar.

The industrial production in the United States grew by 0.1% month to month basis as on September. There is a growth of 0.9% in manufacturing output and 0.4% in mining output. However, there was a slowdown in the demand because of 1% decline in the production of utilities. The market participants and analysts are hopeful that there will be an increase in Fed Rate in the last month of this year. However, there will be a dampening effect on the Greenback because of the soft economic data. Thus it can be easily anticipated that the currency pair NZD/USD will remain bullish for a small time period.

At present, the NZD/USD currency pair is in an uptrend with target level set at 0.7050. The signal line and main line of MACD indicator are above the zero line mark. Hence the NZD/USD currency pair is anticipated to remain bullish.

nzd-usd-pair-october-20th-2016

NZD/USD Pair: October 20th 2016

If you are a currency trader, you can opt for the NZD/USD currency pair at current level 0.7200 and take advantage of the bullishness. You can place a stop order in order to minimise the loss from the long position and it can be placed below the mark of 0.7120. As soon as the currency pair exchange rate reaches the figure of 0.7320, you can sell the long position.

As a trader, you can buy one touch call option from a reputed Binary broker and create a similar position in the digital options market. You should opt for a call option contract having a strike price of 0.7300 and expiry period in November’s 3rd week. It will surely boost your successful trading and make a lot of profits in return.


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