NZD/USD Live Chart

The NZD/USD pair is often debated as to whether or not it is considered to be a “major” currency pair. While the liquidity in this particular currency pair isn’t as strong as some of the others that are considered to be major, the truth is that the New Zealand dollar does in fact have a significant place in the Forex world. True, New Zealand has a fairly small economy, but they are also essentially the “grocery store” for Asia. This is because New Zealand has a highly agricultural economy.

The New Zealand dollar has seen quite a bit of a boost in its popularity since 2000. This is mainly because of the traditionally high interest rates in New Zealand, and the fact that the rule of law makes it an attractive place to invest. Quite often, people will put money into New Zealand via the bond markets, collecting the difference in interest based upon the currency they borrow and the return in New Zealand. They will often borrow US dollars or Japanese yen, and invest in New Zealand to collect that higher return. This is essentially what is known as the “carry trade.”

NZD/USD Live Chart:

New Zealand is an exporter of many different agricultural products, so certain commodity markets can give you an idea of where the New Zealand dollar can go. While the correlation between milk and cattle makes more sense with the New Zealand dollar, the practical application of correlations between various markets and the New Zealand dollar is more or less using the New Zealand dollar as a barometer of overall commodity attitude. In other words, if commodity markets are going higher on the whole, so is the New Zealand dollar. This of course works both ways.

Another thing you need to pay attention to in the New Zealand dollar is what the Australian dollar is doing. Over the longer term, the Aussie and the Kiwi dollar tend to follow each other as far as direction is concerned. So for example, if the AUD/USD pair is falling, typically the NZD/USD pair is falling as well, over the longer term.

Spread on the NZD/USD

The spread on this pair tends to be reasonable, but fairly large for a major pair. Typically somewhere between four and five pips, this makes the New Zealand dollar a pair that tends to scare away new traders. There really is no reason for that, because the difference of only one or two pips should not be affecting the way you trade. The New Zealand dollar is considered to be a “risky” currency to own in the sense that it is influenced by higher bond yields and the commodity markets, so as long as you keep in mind that it is directly influenced by risk appetite around the world, you typically will be on the right side of the trade as far as the New Zealand dollar is concerned.

The economic numbers attend to move the NZD/USD pair are of course interest-rate announcements out of both the Royal Bank of New Zealand and the Federal Reserve, but also employment numbers out of both countries. Expect GDP to influence numbers as well, and Asian economic numbers to influence the way the New Zealand dollar moves. Remember, since so many of the exports out of New Zealand had to Asia, a strong Chinese economy tends to be very positive for the New Zealand economy.

As far as time of day to trade this market, it does tend to move more during European and North American markets. It’s not that this pair can’t move during Asia, it’s just that most of the trading done in this market is used as a proxy for commodity markets, and therefore it tends to be the larger firms in places such as New York and London that place the most amount of money in this market. However, the pair being a bit less liquid than the other majors tends to make this pair move quicker. Because of this, massive gains or losses can be had in the NZD/USD pair, which makes it very attractive for those willing to take the chance.

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