The New Zealand dollar rallies on Thursday

The New Zealand dollar rallied on Thursday, using the 0.7050 level as a support level. As I record this, we are testing the 0.71 handle, an area that is a large, round, psychologically significant figure, but I believe could be broken. If we get above that region, I think there is a lot of noise near the 0.7130 level that could keep the market down, and I would look for exhaustion in that area to continue selling. In fact, I believe that the 0.72 level should continue to be a bit of a “ceiling” in the market, but I also recognize that the longer-term consolidation extends down to the 0.68 level. Regardless, it’s going to take a lot of negativity to break through the 0.70 level, simply because it is such a large number.

If we were to break above the 0.7225 level, then I think we turn around and reach towards the 0.7350 level again. I believe that the market should continue to be very choppy, but keep in mind that the New Zealand dollar is very sensitive risk appetite overall, as it is so highly leveraged to commodity markets. As a knock-on effect, the market also will pay attention to stock market reactions, because the stock markets can give us an idea of how traders are feeling in general. The higher they go, generally the better risk appetite is, and then of course the better the Kiwi dollar will do.