The graphs on the following page may help give a bigger picture of the longterm NZD/USD trend http://nationalbank.co.nz/economics/exchange/nzdusd.htm
If you are actually serious about trading the nzd I would watch the aud/nzd relationship. This is one with a relatively small band and (as an ex nz'r) the one that really governs the international rate for the NZD. If the aussie falls wrt the usd then nz will basically follow it. Personally I wouldn't trade anything as thin as the nzd ... you pay too much spread and you are exposed like hell to manipulation. This is why most serious Nz traders trade other countries stock and futures exchanges not the nz one ... how big a market do you get with 3.5 million odd people and an agricultural economy? When in NZ most of my friends used to trade US stocks. Now I'm in Aus I trade HK and SGX exchanges and sometimes Europe or EUR/USD if theres nothing on TV in the evening
I believe the fundamentals fully support the move downwards, although perhaps not the velocity of the move. New Zealand exporters have been complaining about the overvalued NZD for two years now. The economy has been very strong for the last few years and that has been reflected in the stock market. It is now accepted by all that it is coming to an end, including the bull run in the stock market. Although for now the RBNZ has not indicated any change in interest rates. I think it is also worthwhile to check out the charts comparing NZD/USD with AUD/USD over the last five years. This correlation doesn't appear as strong on correlation tables because the movements do not coincide within the arbitrary time frame, but they are clearly intrinsically linked.
remember 5 years ago nzd at 40 c US an influx of the america's cup and money flowed to the country. Sept 11 , Bali bombings happened and tourists came to NZ for a holiday. Students from Asia came to NZ. Nice surplus in the balance of trade in those days. This month's balance of trade was the worst in 30 years. Students from Asia are staying away in droves, the last year alone it has dropped by 30% No america's cup Exports drying up because the NZD has become too high. Free trade agreement with China - the Chinese can send any of their stuff here, many people buy overseas stuff coz "it is so cheap". (eg electric tools for 12 - 14 NZD while an icecream costs 2.50. Something seriously wrong here) Lots of companies are going under because they cannot compete with 40 USD / month labour from China. The economy is in bad shape, look out we may see in a few years 40 c US for 1 NZD again, potentially even lower. Hope this helps Maria
Well it's all relative - in the last five years AUD/NZD has varied by +/- 9.6% from the midpoint, while in the same period NZD/USD has varied +/- 30%. While AUD/NZD does diverge, overall they do follow the same path. Australia is New Zealands largest trading partner - New Zealand is virtually the seventh state of Australia.
I think the potential for downside in the USD far outweighs that in the NZD. But I appreciate your commentary.