NZD Dairy and USD Pairs: Levels, Ranges, Targets

New Zealand’s Dairy Auction on Tuesday revealed a 3.1% increase in the overall GDT Milk Index while NZD/USD Tuesday dropped 1% from 0.7015 to 0.6942. Thanks to extensive records maintained against multiple thousands of trades, Tuesday;s day trade was easily accessible.
NZD/USD faced stiff resistance at 0.7019, 0.7046 and 0.7055. When NZD failed to break 0.7019, down was the only path. The NZD/USD and Milk Correlation viewed from 2015, 2016 and within the past year runs +70%. If this Correlation held significance then NZD should’ve rose at least 1.5% to 2%. Instead it dropped 1%. NZD couldn’t even rise + 0.7 to meet the Correlation.
Back to the trade service and fund managers to impart Milk fails miserably to explain 1 pip of NZD price movement and therefore the concept of NZD as a Commodity currency is a giant myth. NZD was dropping anyway but not as a result or cause to Milk prices. Milk prices are traded in NZD, EUR and USD predominantly but sellers and buyers predominate therefore the GDT index moves ever so slowly as final prices settle. How can NZD not correlate to its own Milk prices is the same as saying how can NZD not correlate to its interest rates. Both must correlate but only only one moves NZD prices.
NZD Milk in EURO’s always trades below NZD prices by about 10 Euros. On Tuesday, EUR/NZD flew higher from 1.5477 to 1.5766. Why didn’t it drop is because Milk imparts zero information to a currency trade as EUR/NZD prices operated correctly. Its not the lack of knowledge from the trade service as this is expected but what’s wrong with the fund managers to maintain such company.
Where Milk is vital to the NZD trade is because its New Zealand’s main export but the Export aspect must be viewed when Trade Balance figures are released. Generally, a rising Milk price would see good trade balance figures. March 2017, NZD reported it first trade surplus of NZD 332 million yet overall its 1 year deficit runs NZD 3.7 billion. Seen in the corresponding period is Milk at 33 lows to current 49. June Trade Balance determines the effect from 33 to 49.

USD/JPY today must break for longs or shorts 111.00 and 111.50. Tow soli points to the donside are 110.87 and 110.93. A break of 110.87 then far lower for USD/JPY. USD/JPY gains speed on a break of 112.72, this line is dropping by the day and USD showdown is on the way.
Severely overbought USD/CAD from 1.3300 needs breaks for longs or shorts at 1.3687 and 1.3626. A Break of 1.3625 Targets 1.3583. USD/CAD is far to overbought to consider longs.
Oversold USD/CHF for longs and shorts must break 0.9929 or 0.9975. USD/CHF is screaming range break which means current prices won’t hold present ranges must longer. Alongside 0.9975 above lies falling lines 0.9991 and 1.0020. Take a look at 0.9898 s long point.
 

Brian Twomey

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