Golden Cross Pattern on NZD/USD Daily Chart

Dan Blystone TradersLog.com

A bullish golden cross pattern (50-period moving average crossing above the 200-period moving average) has formed on the NZD/USD daily chart. The pattern comes in the context of mixed news for the kiwi.

Chinese officials reported on Wednesday that the Wuhan coronavirus has now killed at least 17 people in China and caused hundreds of confirmed infections. According to data from Johns Hopkins University there were 555 confirmed cases of the virus as of Wednesday evening. Officials have confirmed that it is contagious between humans. Cases have also been reported in Japan, Thailand, Taiwan, South Korea, Macau and the United States. Risk sensitive currencies such as the Australian dollar and New Zealand dollar were pressured by the news while the Japanese yen was lifted due to its safe-haven appeal.

Meanwhile, news of the signing of the ‘Phase One’ trade deal between the US and China last week was positive for the New Zealand dollar. China is New Zealand’s largest trading partner and upbeat news for China’s economy normally underpins the kiwi. Greater clarity on Brexit is another factor helping risk sensitive currencies such as the New Zealand dollar.

The Australian dollar rallied sharply on Thursday after a blockbuster jobs report lowered expectations of an RBA rate cut in February. The Australian Bureau of Statistics reported that the country's unemployment rate unexpectedly fell to a nine-month low of 5.1% in December and 28.9k new jobs were created, beating analyst expectations.

Further upbeat news for the kiwi came from global ratings agency Fitch, who held New Zealand's long-term credit rating at AA and upgraded the outlook to positive. Fitch stated that the upgrade in outlook reflected the country's sound fiscal management and declining level of government debt as a proportion of gross domestic product (GDP).

Investors now look to New Zealand's Consumer Price Index (CPI) data, due for release on Friday (New Zealand time). CPI is a key measure of changes in purchasing trends and inflation. Analysts expect year-over-year CPI to come in at 1.8%, close to the Reserve Bank of New Zealand's target of 2%.

Author

Dan Blystone

TradersLog.com

Experience Dan Blystone began his career in the trading industry in 1998. He worked as an arb clerk on the floor of the Chicago Mercantile Exchange (CME), flashing orders into the currency futures pits.

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