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GDT price index preview: What to expect of NZD/USD?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 1, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Global Dairy Trade (GDT) will release its dairy price index, which is published every two weeks and uses a weighted-average of the percentage changes in dairy prices sold at auction. The index has gained relevance lately, as approximately 7% of New Zealand GDP comes from milk exports.

    The latest reading on February 16th showed a 2.8% decline in the price index compared to it previous release.

    “Sure, dairy futures on the NZX have increased noticeably since the last GDT auction.
    But then they grossly over-predicted weakness at that auction. So the subsequent bounce in the futures is more a comeuppance than any truly positive pointer for this week’s auction”, said Craig Ebert, Senior Economist at BNZ. “All things considered, we have ceded to neutral for this week’s result. That’s not the same as being blasé about it, of course. As today’s ANZ business survey made plain, the rural (read: dairy) sector is hurting.”

    NZD/USD technical levels

    Ahead of the auction, NZD/USD was trading around 0.6614, 0.39% above its opening price as the risk-on mood lifted commodity-currencies. A positive GDT reading could potentially underpin further the New Zealand dollar, while a less expected negative reading will likely reverse the intraday course.

    As for technical levels, next resistances line up at 0.6646 (200-day SMA) and 0.6751 (Feb 4 high) ahead of 0.6774 (Feb 26 high). On the flip side, supports are seen at 0.6585 (Mar 1 low), 0.6545 (Feb 16 low) and 0.6508/00 (Feb 3 low/psychological level).
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