The New Zealand Dollar closed lower on Friday, pressured by a drop in demand for risky assets after Apple announced the re-closing of nearly a dozen stores in states reporting spikes in COVID-19 cases. Sellers were also influenced by the news that the New Zealand economy shrank in the first quarter, and will likely perform even worse during the second quarter.
On Friday, the NZD/USD settled at .6409, down 0.0019 or -0.30%.
The pandemic dented New Zealand’s economy in the first three months of the year, according to official figures that foreshadow a more severe downturn in the current quarter. Statistics New Zealand said the first-quarter contraction was the largest in 29 years.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart; however, momentum is trending lower. The main trend will change to down on a trade through .6381. A move through .6585 will signal a resumption of the uptrend.
The minor trend is down. This is driving the momentum lower. A trade through .6507 will change the minor trend to up.
The short-term range is .6585 to .6381. Its retracement zone at .6483 to .6507 is resistance. The upper or Fibonacci level at .6507 stopped the rally on June 16.
The main range is .5921 to .6585. If the main trend changes to down then its retracement zone at .6253 to .6175 will become the primary downside target.
Even with global equity markets finishing higher last week, the NZD/USD still settled lower. This could be the first sign of a decoupling where investors put more emphasis on the local and less on risk sentiment.
Investors may have run up the Kiwi in anticipation of a better economy in the future due to New Zealand’s successful battle with the coronavirus pandemic, but the numbers suggest one of the world’s strictest lockdowns that kept people at home and shuttered most businesses may have had a tremendous negative impact on the economy.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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