Kiwi (pronounced /kiːwiː/) or kiwis, are flightless birds native to New Zealand. They are rare due to being vulnerable to just about everything. It has been said though, that if this meek bird were faced with a Wallaby, the stare of the Kiwi would instantly kill it! All jokes aside, the Kiwi as a currency (NZD), is nothing like its namesake. In fact, it is one of the strongest and best performing currencies out there right now and it is certainly taking flight!
With the instability in the markets due to the ripple effects from the UK referendum as well as the debacle that has been the Australian election (which is still dragging out), the Kiwi has been one of the most stable looking local regions. New Zealand continues to mind its business whilst selling its wine, apples and sheep and this is evident in the strength of the NZD.
Let’s take a look at the charts to see just how strong the Kiwi has been when compared to some of the weaker currencies of late. Starting with EUR/NZD:
A fantastic trend is in place with the Euro weakening against the might of the Kiwi. This trend is smooth, flowing and rather predictable with several pull backs into the sell zone (10 & 20 MA). It is this type of trend that allows a trend following trader, like myself, to be patient and wait for a high probability trade to set up to join this overall trend.
Above is the daily chart for GBP/NZD. Sterling is being trounced by the Kiwi with a 4,000 pip move over the past 2 months. I hope the same occurs on the rugby pitch next time they play!
Now it’s NZD/CHF, and once again there is a really nice trend in place with the MAs fanning, price pulling back into the buy zone (10 & 20 MA) and relative stability and predictability in the current trend.
There has been a massive amount of volatility in the markets of late which can be a good thing for astute traders as this manifests strong moves, I am certainly not complaining! I do however like consistency with the markets and I love good trends. The US index markets for example, have had a big move lower on the Brexit news and have now all but recovered those losses. This is highly volatile yes; but are not good trending conditions. The stability in New Zealand while many other nations are seemingly going batty is reflected in the strong trends formed by its currency. It is for this reason that I will maintain my focus on the small flightless bird of a currency as it continues to dominate the forex market. I will however be avoiding its stare!