New Zealand Dollar rallies on positive China data

• The New Zealand Dollar continues rising on Wednesday as positive news from China helps boost commodity prices.
• The Kiwi had already rebounded after lower-than-expected US CPI data led to hopes of an end to the global rate-hiking cycle. 
• NZD/USD breaks to fresh highs and targets the October highs at 0.6055. 

The New Zealand Dollar (NZD) continues to build on the previous day’s gains midweek after a raft of positive growth stories from China, its largest trading partner, boosted the prospects for exports.  

From a technical perspective, the pair’s short-term trend has turned bullish again and is closing in on the key October 2023 highs at 0.6055. 

Daily digest market movers: New Zealand Dollar: China in the spotlight

• The New Zealand Dollar rallies after data from China lifts the outlook for trade and reverses the recent spate of lackluster readings. 
• A support package from the Chinese government, amounting to an injection of 1 trillion Yuan in low-cost financing for the beleaguered property sector, also helps allay fears of a credit crunch, according to a report originally from Bloomberg News.
• Data out early Wednesday morning showed Chinese Retail Sales rose 7.6% in October YoY, squarely beating estimates of 7.0% and 5.5% previously, according to the National Bureau of Statistics of China. 
• Industrial Production also beat expectations, coming out at 4.6% YoY in October versus consensus estimates of 4.5% and 4.5% previously. 
• Fixed Asset Investment came in at a lower 2.9% than the 3.1% forecast (YoY YTD in October) and the 3.1% previous.
• The strong Chinese data, coupled with lower inflation data from the US, UK and several European countries, lessened global growth fears and led to a surge in risk appetite, with stock indices across the globe seeing marked rallies. 
• New Zealand is a major exporter of dairy products to China, so the positive newsflow helped support the prospects for the economy and demand for the New Zealand Dollar.
• The US Dollar has fallen after inflation data suggested a greater chance of no further increases to interest rates. This makes the US a less attractive place for global investors to park their capital, reducing demand for the USD. 

New Zealand Dollar technical analysis: NZD/USD continues rallying

NZD/USD – the number of US Dollars one New Zealand Dollar can buy – extends its rally above the important November 3 high at 0.6001 and sets its sights on the 0.6055 October high. 

New Zealand Dollar vs US Dollar: Daily Chart

The break above 0.6001 confirms the short-term bullish bias again, with the next target at 0.6055.  

The pair has now broken cleanly above the 100-day Simple Moving Average (SMA) and a further push above the 0.6055 October high would change the outlook in the medium term, indicating the possibility of the birth of a new uptrend. Such a move would then target the 200-day SMA at around 0.6100.

As things stand, the medium and long-term trends are both still bearish, however, suggesting the potential for more downside remains strong.