NZD/USD retakes 0.7100 amid US dollar strength, GDT next

Currently, NZDUSD is trading at 0.7105, down -0.36% on the day, having posted a daily high at 0.7148 and low at 0.7076.

The New Zealand dollar started a new year with a decent recovery all the way from 0.6883 (Jan. low) amid neutral to bearish expectations from different analysts and technical indicators. However, It's not over until It's over, a perfect quote to explain how markets tend to change and adjust on a weekly basis (or in a matter of seconds) as prices printed a new high at 0.7145, not too far from 0.7237 (Dec. 2016 high). 

Expected mild improvement in dairy prices; more NZD upside ahead?

The Cattle Site reports ahead of this week's GDT auction, "Whole milk powder prices look likely to improve a little after dropping 7.7 percent at the previous sale in what was later seen as a rebalancing between the main products on offer. In the big picture, analysts said the likelihood of continued declines in world production would remain supportive for prices this year."

New Zealand's robust residential market; Healthy economy?

NZherald reports on the state and current real estate indicators, "The Nationwide property has hit the $1 trillion mark for the first time. In comparison NZ listed stocks are worth a combined $114 billion, Auckland investors increased last year after being initially being affected by the loan-to-value ratio restrictions from late 2015, accounting for 43 percent of sales, The QV House Price Index shows annual growth in Hamilton peaked at 31.5 per cent in July 2016, while Tauranga's peak was a month later at 28.5 per cent. Net migration, low-interest rates, and low supply continue to contribute to rising house prices across the country."

NZD/USD Levels to consider

In terms of technical levels, upside barriers are lined up at 0.7237 (Dec. 2016 high), 0.7400 (Nov. 2016 high) and 0.7484 (2016 multi-week high). While supports are aligned at 68.83 (Jan. low) and 0.6861 (Dec. low) and below that at 0.6674 (June 2016 low).

To summarize if dollar weakness were to continue (that's a big 'if') and Global Dairy Trade adjusts slightly to the upside with a positive reading, then a retest of previous 2016 highs are a doable impossible. Furthermore, on the long-term perspective, the Kiwi has two potential horizontal values that traders and investors most note: at 0.7002 (short-term 61.8% Fib) towards 0.7488 (short-term Fib extension) this value trapped 482-pips from high to low. Then, from 0.8841 (Aug. 2011 high) backward to 0.3900 (Oct. 2000 low) the long-term Fib projection delivers another relative value to consider at 0.6952 (long-term 61.8% Fib) towards 0.6370 (long-term 50.0% Fib) if prices close and open below that 61.8%, it can push prices lower in the next 6-months. 

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