According to the Triennial Central Bank Survey by the Bank for International Settlements BIS , the currency composition of global Forex trading has been notably shifted during the period Among the most actively traded advanced economy currencies, the New Zealand dollar, alongside its Australian counterpart, continued to expand its presence in global Forex trading.

The New Zealand dollar has increased its share in global currency trading from 1. It is a market economy greatly dependent on international trade.

Because of its small territory and the huge distances from major world economies, the country is faced with challenges on the international scene. This figure is the result of increasing demand for imported dairy products, especially after the Chinese milk scandal in Agriculture accounted for around 4.

Currency Pair NZD/USD (New Zealand Dollar/U.S. Dollar) - Forex - Investopedia

The sector of services registered consistent growth between and , with annual growth rate averaging 3. Tourism is one of the largest single sources of foreign-exchange revenue and also a key growth industry in New Zealand. Although not a government department, it has been entirely owned by the government of New Zealand since The central bank has three major functions: These functions are specified in the Reserve Bank Act , which also gives the Reserve Bank statutory independence to carry them out.

In order to implement monetary policy, the RBNZ sets the Official Cash Rate OCR , which is reviewed eight times per year. The OCR was introduced back in March at a level of 4. Its all-time low 2. Since the beginning of the central bank has introduced four consecutive rate hikes from a level of 2.

New Zealand economy registered an annual growth rate of 3. The Consumer Price Index CPI provides information about changes to the prices of consumer items, which New Zealand households purchase, and is also a measure of consumer inflation. In New Zealand 11 groups of items comprise the CPI: In annualized inflation was reported at 1.

The latter has been the lowest annual rate since Q2 , when the CPI rose 0. Producer prices reflect the performance of private sector entities in New Zealand, a closely watched indicator by the Reserve Bank of New Zealand. There are two indexes to measure prices — the Input Producer Price Index, which measures the cost of items business entities purchase, and the Output Producer Price Index, which measures the prices private sector entities receive for their goods and services.

Within the period the Input Producer Price Index in New Zealand marked the largest quarterly increase of 5. In Q3 the Input PPI fell 1. The PPI dropped at a quarterly rate of 1. Within the period the Output Producer Price Index in New Zealand marked the largest quarterly increase of 3.

In Q3 the Output PPI dropped 1. The PPI fell at a quarterly rate of 0. The Household Labour Force Survey presents data in regard to the number of people employed, unemployed, and not in the labour force, actual and usual hours worked and the number of people in occupations and industries. The employment change, as an indicator, reflects the change in the number of people in paid employment.

It has a direct link to consumer spending and respectively, to overall growth. Within the period employment in New Zealand rose at the highest quarterly rate of 1. In Q3 the number of people employed increased by 18 , or 0. The number of unemployed persons was recorded at in Q3, or a 2. In Q2 the number of people employed rose by 10 , or at a quarterly rate of 0.

The number of unemployed persons was registered at in Q2, or a 6. In Q1 the number of people employed rose by 22 , or 0. The number of people looking for employment was unchanged at in Q1, while the rate of unemployment was also steady at 6. Within the period the nation had the largest trade deficit in September, which amounted to NZD 1.

In New Zealand had six consecutive months of surpluses starting January and four consecutive months of deficits starting July.

The last deficit figure in October was at the amount of NZD 0. It has been the largest October deficit since , as exports to China marked a sudden drop, while imports of capital goods expanded. Major industries are petroleum, steel, automobile production, aerospace, construction and agricultural machinery, chemicals, electronics, telecommunications.

Moreover, as of the United States is the third-largest producer of oil 8 barrels per day, or 9. Taking into account the sheer size of the US economy and its pillars of strength, one can clearly understand the effect of economic data from those sectors on the US dollar, and in turn on the global Forex market. Depending on the Forex broker used, the spread can be fixed, floating, or both. For the purpose of this article, we have chosen the average spreads provided by 10 brokers, namely Saxo Bank, Dukascopy, Alpari UK, XM, Forex.

Let us look at Table 1, which reflects the strength of the US dollar against a number of currencies. For each pair in the table we used the low price on May 8th and the closing price on December 31st.

The US dollar gained the most against the Russian ruble, showed almost no change against its Hong Kong counterpart and lost ground against the Chinese yuan only.

On the basis of results in Table 1, we move on to rank each of the 22 currencies. As can be seen from Table 1. The New Zealand dollar has lost 9. As a key component of advanced portfolio management, correlation is crucial for achieving maximized risk-adjusted return. A correlation of 0, which in the world of finance practically does not exist, means that movement of the two assets is completely random.

The statistics are derived from daily market data, encompassing periods trading days , or approximately the whole year These fluctuations directly impact the amount of risk a trader is subjected to, but also his return.

A higher volatility means that the currency pair could potentially perform a sudden and drastic move in either direction over a short period of time. In contrast, low volatility implies that the exchange rate does not have the potential for wide fluctuations and instead moves at a steady pace over a longer period of time. Lower volatility carries less risk for market participants, but it is also much harder to profit from, especially by shorter-term traders such as scalpers and day traders.

For the purpose of this article, we have selected to display historic volatility calculated over the last 52 weeks, or the period between January 1st and December 31st In order to measure historic volatility of each currency pair on our list, we use two methods similar to the Average True Range:. Table 4 in the appendix presents generalized data regarding the average annual volatility, shown by the seven major pairs in At the beginning of the year the pair tended to have the most significant daily volatility.

In late January and early February the cross showed daily moves of about pips. As the year progressed, the daily volatility decreased, as in June and July the pair showed daily moves of under 80 pips. The lowest daily volatility about pips was registered in late August.

Within a trading day the highest volatility was registered between The lowest volatility during the trading day was recorded between 4: Within a trading week the pair tended to show the highest volatility on Wednesday about 85 pips and the lowest volatility on Monday about 65 pips.

Carry trades are one of the most popular trading strategies used in the Forex market. When performing a carry trade, a trader typically sells a currency with a relatively low interest rate, while purchasing a higher-yielding one.

The objective is to profit from the difference in interest rates, which can be substantial, especially when taking into account leverage. As we already said, the Official Cash Rate in New Zealand is currently maintained at 3. However, it is expected to accelerate slowly in an intermediate term.

The Fed has committed to begin raising borrowing costs in , having already concluded its Quantitative Easing program. In the future such opportunities will depend on the policies followed by the two financial institutions — the timing and the pace of possible rate hikes.

Let us provide an example. Highest trading volumes and volatility can be expected during the Asian and the US trading sessions, and more particularly when key economic indicators are released. Trading the major economic releases and other events without the help of technical analysis is basically done using three general strategies — using a proactive, a reactive or a mixed approach.

Logically, a mixed approach combines the previous two. Let us have a look at a simple trading system, which utilizes the Average Directional Index and a set of Exponential Moving Averages. You can check it out here.

NZD (New Zealand Dollar) - Latest News, Analysis and Forex Trading Forecast

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NZD/USD - Live Rate, Forecast, News and Analysis

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