The Other Dollars
Not every Dollar currency is in the dumps. The Australian and New Zealand Dollars are performing quite well, with traders moving funds down under to capture the wide interest rate differentials between the U.S. and these countries. Currently, Australia’s short-term rates are 1.75 points higher than the U.S. and New Zealand’s are a whopping 3.5 points higher! The outlook for a weakening U.S. economy has traders looking for additional interest rate cuts in the U.S. this year, which furthers the appeal of investing in Australian and New Zealand government debt, with the countries’ stability and relatively high yields attracting investors. Traders in these so-called “carry trades” also favor the Aussie and Kiwi against the Japanese Yen and the Swiss Franc – the most popular “borrowed” currencies.
Looking at the daily chart for the December New Zealand Dollar, we notice prices continuing to hover near 6-week highs. Prices seem to be tracking closely to the 100-day moving average, and a weekly close above this key moving average would be considered a friendly sign towards the Kiwi. However, the 14-day RSI is hovering in overbought territory, with a current reading of 73.27. Resistance is seen at the recent highs of 0.7430, with major support found at 0.7173. In early trade, December New Zealand Dollars are trading at 0.7384, up 0.0020.
Mike Zarembski, Senior Commodity Analyst
