Article 19, Day 8..... NZD USD – New Zealand Dollar US Dollar December 14th, 2012 by Chris Pottorff | Category: Basics NZD is a currency abbreviation for New Zealand dollar; it is an ISO 4217 and carries numeric representation 554. It is the officially certified national tender used by public within New Zealand, Pitcairn islands, Tokelau, Niue, and the Cook Islands. It belongs amongst major currencies and enjoys a special weight age amongst the dollar-dominated currencies of the world that fall in the major category. NZD or New Zealand Dollar is commonly and frequently referred to as “kiwi”. The New Zealand dollar came into existence in 1967 when New Zealand pound was done away with and NZD was declared the official circulating currency of New Zealand. It is officially illustrated with the help of the regular dollar symbol “$” but the only difference is that since this dollar belongs to New Zealand the symbol is prefixed with the alphabets NZ and the whole thing reads as “NZ$”. This helps the NZD get distinguished from other dollar currencies. Besides dollar, “cent”, is also in circulation as a smaller, broken down unit of dollar. We can say it’s a subunit of New Zealand dollar. Overview of New Zealand Dollar The New Zealand dollar or Kiwi, as it is commonly known is the 10th most highly traded currencies worldwide – happens to hold a significant stature when it comes to all the dollar-dominated currencies. New Zealand is a stable and robust economy looking upwards, which makes it a number one choice for investors across the globe. The New Zealand dollar is such a stable unit that independent economies around New Zealand like, Cook Islands have converted or replaced their own currencies with dollar. However Cook Island does have its own independent currency in circulation too, besides the dollar. Now let us share some peculiar and interesting facets related to the currency of New Zealand. The currency notes bearwell-known “:Maori” work or art along with the name of images published on these currency notes, which are written in Maori script and all the names start with a consonant. The notes are available in several denominations however its fifty dollar currency note is the only note where Maori work can be seen on the other side of the note. The pictures of significant historical characters that can be seen on the banknotes includes images of two important people on five and twenty dollar notes who are still alive, but the remaining people whose images we see on these notes are all being dead. On a twenty dollar note Queen Elizabeth II’s image can be seen. This happens to be the image of a personality who is or had never been the citizen New Zealand. New Zealand boasts of an economy, which has a tendency to spring back to its original firm ground in spite of big and small economic upheavals from inflationary pressure to natural calamities. It is the New Zealand dollar which helps the economy get back on its feet and get closer to its objective of remaining a strong and stable economy. There is no limitation or restrictions imposed by government to import and/or export of the currency however before one does it he/she is required to make an official declaration if the amount exceeds or is likely to exceed $10000. Structure of NZD The New Zealand dollar came into being in 1967 when it was planned that the country will shift over to decimalization concept. The responsibility to look after and take control and care of the currency was given to the Reserve bank of New Zealand, which existed and operated at that time. And since 1967 Reserve Bank is the sole supplier currencies comprising both the coins as well as the notes. NZD is broken up or sub divided into 100 cents of equal worth. Coins in New Zealand are issued by the authority in 5 denominations. And they are 10 cents coin, 20 cents coin, 50 cents coin, $1 dollar coin, and $2 dollars coin. The front of the coin comprises an effigy of Queen Elizabeth II. It is the same effigy which is being used in the commonwealth of the queen. The other side of these coins have different images print for each denominations. Then in the month of July in the year 2006, new adaptation of the coins was issued which weigh less than before but some changes can be seen in the designs which do resemble the old one on many ways. The old coins which were in circulation, before the new version was launched, have been withdrawn from market and it is not legal to use them anymore in the open market. However they can be en-cashed at the reserve bank. oming to currency notes issued by government, the New Zealand currency notes come in 5 denominations which are; NZ dollar 5, $10, NZ dollar 20, NZ dollar 50 and NZ dollar 100. Paper made cotton was used to manufacture these notes before 1999. As technology advanced the same were replaced with polymer banknotes. These notes, same as in case of New Zealand coinage show images of different historical and important personalities on the front side and on the reverse side different wildlife images can be seen from a yellow eyed penguin ( on NZ$5 note) to Kokako, a rare bird on the 50 dollar note. Their 100 dollar note shows “Mohua”, a bird on the reverse. History of NZD The New Zealand Dollar, as the name suggests is an official tender of New Zealand. It is also known as Kiwi, a name given alter the country’s national bird. NZD is the officially accepted abbreviation for the New Zealand Dollar. This currency has been in existente since 1967, befote which the official tender was the pound. The new dollar currency is accepted along with in New Zealand, also in Niue, Tokelau, Cook Islands, and the Pitcairn Islands. There are some very peculiar as well as interesting facts doing the rounds in market about the New Zealand Dollar. Some of them are; though the NZD is broken up equally into one hundred cents, there is no coin below 5 cents from 1990 ever since one and two cent coinage was withdrawn from market as legal tender. As a result for all cash transactions, values get rounded off to the nearest 5 cents. New Zealand banknotes have denominations of $5, $10, $20, $50, and $100. BEfore 1991, at the time of introduction of $1 and $2 dollar coins, even bank notes existed for the same denomination but as coins were introduced, notes got withdrawn by officials. From ’99 onwards New Zealand dollars have been getting printed on plastic polymer instead of paper. This new polymer version lasts much Longer (so much so that sometimes they have managed come out alive even after going through a run in washing machines), and also comes with a features which makes the banknotes difficult to counterfeit. The denominations of coins in New Zealand comprise five, ten, twenty, fifty cents, one and two dollars. The 1 and 2 cent coins were withdrawn from market April 30th 1990 onwards, and as a result of this 5 cents became the smallest transaction possible. But when it came to payment by checks or when funds were trasnferred electronically, these types of transactions had scope for transactions that were not necessarily in multiples of 5 cents. Various factors impacting the exchange rates between two countries Uncertainty they say is the only certain when we refer to Forex Market. Different factors affect different economies, and the rate of exchange for their currencies, differently. Besides regular factors there may also exist unique or peculiar factors which may impact only a select set economies in peculiar situations. Some of the most common and universal factors which may impact the rate of exchange for any currency may include, flow of imports and exports between the countries; capital flow between the countries; relative price increase percentage; variation limits imposed by the governments of the countries on rate of exchange of currency; tradebalance pertaining to commodities; Economy’s Inflation Rate; inter country payment flow against purchases of stock and bond; comparative growth of the counties can also have an impact exchange rate for the currency; short term and long term interest rate difference or parity; & finally the borrowing cost. Suggestions to Trade Forex in New Zealand New Zealand is an industrially progressive country demonstrating a consistent growth in GDP. It has shown a healthy Per Capita income till as recently as 2010. Majority of their revenue and growth is a result of their import-export of farming resources. Almost 80% of its GDP is a result of their agricultural segment. New Zealand’s business partners include countries like Australia, China, Japan and the USA. Forex Trading in New Zealand: An Overview The Reserve Bank of New Zealand is country’s central bank. Its strategies and guiding principals are developed and implemented with a view to maintain the balance of the fiscal structure and to meet the currency expectations of the public, while maintaining rise in cost of living between one and three percent. This institution is also responsible as Foreign Exchange Regulatory Authority of NZ. Factors Affecting Forex Trading in New Zealand Let us discuss some points and issues that will help a trader while he/she is trading in New Zealand. The first thing to remember is that the population of this country is way too very small as a result of which even mildest of movement or increase in relocation is likely to effect on the economy quite harshly. New Zealand’s Gross Domestic Product is heavily dependent upon the agricultural products that it exports. Another important issue is that the weather conditions can have an effect on the economy as a result of which exchange rate may experience a dent or high depending on the situation. A recent series of droughts did take its toll and ended up damaging and injuring economy of the country. A very crucial thing to keep in mind for a trader is that New Zealand’s economic stability is directly connected to the economic conditions prevailing in Australia, they being the biggest clients. If the markets even slightly show sign of drop in Australia, its impact on New Zealand economy is bound to show. New Zealand Dollar is also known amongst the commodity linked currencies. This means that if an increase in commodity prices is noticed, appreciation in price of the NZD also has to how. Similar to the Australian dollar, the NZ dollar also enjoys the standing of a carry trade amongst trading community. The reason for this is that New Zealand has the highest interest rates applicable. NZD and Gold Prices Let us also discuss in the same breath how Gold Prices can impact NZD. When it comes to NZD exporting goods and various other items to Australia, it is considered its top most high light. New Zealand supplies many things to Australia and is one of their major partners and suppliers. So when AUD currency is showing strength because of high gold prices, in such a situation NZD will take advantage and use this opportunity to the optimum. They will export maximum to Australia during such phases. Since AUD enjoys a higher purchasing power at such times. Let us also consider the opposite economic scenario, that when the tables are turned and gold prices are beginning to show a fall and AUD weakening, at such times, the exports will dip. The association becomes rather interesting to watch when it comes to exchange rates because NZD enjoys correlation with pricing of Gold metal which happens to show a lot of strength as compared to what AUD does. However NZD does not turn out Gold Metal in the same quantity as Australia does. Fundamental and Technical Details about NZD USD The New Zealand dollar is known as a major as well as a commodity currency in the Forex market. It owes its status of being called the `commodity’ currency to the fact that this economy is highly dependent upon commodity exports. New Zealand also happens to be world’s 62nd leading economy. While trading NZD as a trader is keeping his eyes and ears tuned to the economic announcements coming out of New Zealand, he should ensure that he/she is not missing on announcement or statements issued by Reserve Bank of New Zealand; he should keep a watch on Official Cash Rate; on Employment figure Making, Implementing, & sticking to a Trading Plan Whenever you plan to take currency trading seriously enough to pursue and earn profits from it for at least a few years, make sure that you start right. Focus on limited number of currency pairs to begin with and don’t start with trading any pair haphazardly without doing your home work and studying the nature of pair you are trading; take one or two pairs initially to understand personalities of these pairs enough which will help you to get on the trace where you can start booking real profits. Be sure that you are dealing with limited pairs because I have seen friends and colleagues in my trading career who have extend themselves way too much trying to cope with volatility related to currency market for all various currency pairs and in the course not understanding anything about either of them at all. The best way therefore is make a blue print of the plan. The first thing is to decide the reason you want to get into currency trading. The reasons could be many. It is likely that the reason behind your wanting to get into Forex trading to supplement your income sources. Earning additional income from a source that is very different from your primary source of income. You could be an accountant, a teacher, physical instructor, working in a store, school etc working full time. But trading is something you can do part time from the comfort of your home on your computer. You can start small time and then when you start understanding and getting a hang of it and are able to take control of situations, you can spend more time and improve your income remarkably. This new income can be used for so many things, to uplift your present standard of living, to pay off old debts, to take vacations or to save for children’s education. Before you take your plan to next level, analyse your weaknesses and strengths. And the strengths you will require to become a successful trader whether you want to take it as a part of full time profession is that you will have to inculcate the habit of discipline; learn to develop rules and strategies; learn to remain single minded and focused in chasing goals; training your mind and temperament for trading, etc. You should ensure that when you are learning and moving closer to your trading goals, nothing should succeed in distracting you, what you should also understand is to keep your mind always open for news and knowledge and apply it on financial market and to analyse situations and how finally will it impact the currency you are trading. As a trader It will be important that you learn to manage risk and failure. Coming to setting up trading goals is the next step. The goals in the first few years should be modest. As someone new in the game, you should try that for your first year in trading you should at the most least have the same money that you started with! Don’t think of profits in the first year, if you manage to earn it, great, if you lose, don’t lose heart, because one must be prepared to lose some money especially when he/she is just starting out. If you can earn twenty percent return on your initial trades consistently for 2 to 3 years, consider yourself progressing on the right path and stick to everything that has reached you where you are in terms of temperament, mindset, analyses skills… and so on… What your real goal should be is to improve consistently month after month and year after year. But if you lose in a row don’t get stressed over it or you will lose more. Control your anxiety and treat the whole game very logically and keep your mind stable. Now coming to the big question – which Currency Pairs should you decide to trade as a beginner? This is a crucial question and we will deal with it realistically. Since we are discussing NZD USD. Let us only look at this major NZD USD. This tip is also for those who live in NZ. NZ traders go with this NZD USD. Now that the pair is decided lets go on to the job. Let’s see what our daily routine will ideally look like. The important and number one job in the morning is to spend one hour or more carrying out things like, checking, reading, hearing, watching major economic news, then next is to have a look at the charts. Since it’s just the beginning of our long journey we will make sure that our initial strategies will be based exclusively on Knowledge to Action, especially for first few months, therefore we will need to only look at the daily charts and nothing more. Then the next thing is to review all or any existing trades that you may have from previous day, and identify and add new profitable or potent trades for various major currency pairs including NZD USD. Enter and record the new trades in the spread sheet. Remember, we have also promised ourselves to be more organised, so that time has come! This was about daily work routine, now we will view our weekly trading related routine. This will include checking and watching the Mid-Week Market Focus on webinar footage that is based on Knowledge to Action strategy. Weekly routine is also inclusive of reading various market related news, analyses, and articles. Now it is time studying and analysing the charts and get into dummy or demo trading using various strategies. After understanding daily, and weekly routine, we shall now look at what will a monthly routine look like. One’s monthly work generally will involve reviewing the trades a trader has got into from the spreadsheet and double check their latest position and calculate average profit or loss. Should a NZD USD trader treat Negative MACD as Red Signal that is alerting him to be careful with regard to a reversal? Most experienced traders would generally vouch for the fact that the MACD may be extended and sometimes even in very bearish territory; but there are traders who may still not use this signal as a reason for not shorting the pair and taking stance and going for a long position. Actually we can find several traders trading this pair if we really look for them and these are the guys who will be looking at this as an indication or reason to go short on the pair. As experienced traders we must remember as well as remind ourselves as well as our colleagues that just because a price chart or the indicator is comprehensive, that is, it has spread itself in an area where it has not been earlier or at least has not been for some time, that does not mean that chances of reversal are affected in anyway. No trader can completely deny or reject the idea of a potential reversal lurking around; the greater likelihood does remain and vouches for the fact that the pair will continue in the course where it that it tends to. This may take place following a retracement but to expect a reversal that is based on a downtrend is not what trend traders are expected to do. It will do traders a lot of good to remember an old trading proverb: Don’t try to forecast what might happen, instead deal with what is actually happening. Stochastic and EMA Cross Strategy Vis-à-Vis NZD USD Pair Stochastic and EMA are indicators which help trader to help determine a change of course in stocks‘ price patterns. These are two indicators that can work independently of each other but as we know two indicators that compliment each other can certainly do better job. If traders learn to identify a bullish MACD crossover along with a bullish stochastic crossover at the same time, it can help him to use it as the entry point to trade which will give him winning trades. For instance to understand the way stochastic is formed is one thing, but to be able to analyse and read how it will react in different economic conditions is crucial. Coming to MACD it is a multitalented trading tool which comes in very useful in identification of price leaning and its potential course. The MACD indicator is strong enough to stand on its own as mentioned earlier, however its prediction is not found to be absolute. But when this tool is used with another indicator like Stochastic, it can really add value in favour of trader. Let us discuss when it is not advised to use and depend on this strategy: This strategy should not be used in the beginning of the week which happens to fall on a Sunday. Let us consider a real time example for NZD USD currency pair which will show you why this strategy will not work or should be steered clear of on Sundays if it happens falls on the first day for the forex market. I have a case study according to which one Friday in Nov 2010 in CA USA Pacific Time zone – the daily chart for the currency pair NZD USD representing candlestick in the chart showed that it closed above ten pips below the lowerBollinger bands. Then hourly chart was observed for the same pair and based on candlestick trend line was formed and it was observed that this was busted by a long candlestick of bullish pattern. This goes to substantiate the fact that the candlestick which broke or busted the trend line can very well offer an entry signal for a trade that will be a long one but if trader decides to enter a long trade there are chances that he might not be able to strike a profit and may go downhill. So this strategy’s use and implementation at the start of day of the week is not recommended. How to trade the piercing line pattern while trading NZD USD Pair Piercing line candlestick pattern is considered an extremely dependable and amongst the strong bullish candlestick patterns, however it is advised that it is always complemented with one or two more indicators while taking a decision to enter trading. There are real time instances seen as seen on NZD USD daily charts. When we observe some of these charts we notice formation comprising a pair of piercing lines. Here the Indicators like CCI, Stochastic, Bollinger Bands, and Trend Lines are brought to use. The observations made in charts are as follows; Piercing Line Candlestick Formation is formed at the start at the bottom of the Bollinger bands; then we can clearly see a support line at the point where it shaped the Piercing Line Candlestick pattern; The CCI we can see, surpasses the -100 line and gets close to around -200 which signifies reversal could be an option or a possibility; and the stochastic crosses below 20 line and at the time when piercing line candlesticksarrangement gets completed the moving average lines of the stochastic too intercept each other. If we consider all the above aspects most of us would agree that it makes for a good entry. Coming to the other Piercing Line Candlestick Pattern, the same situation is here too but not in a trend that is diving downwards. When traders observe the candlestick indicators they observe that the same is within a market known as the range market. They don’t find CCI also gone below the -100 level; Stochastic is also not found to be below 20 lines. Now when we consider these observations and give it a though and analyze it a little bit, traders will reach conclusion that it is not a good entry. Timing Your NZD USD Trades Whether you are Trading NZD USD as a pair or NZD as a component in any pair timing your trade is an all important factor. It will do you a great deal of good if you know which time frame will suit your trading style and pair the best; when is the market most liquid or dull etc. Traders be aware that that there are no operating hours relating to the New Zealand Forex market. However the New Zealand wholesale banking community follows a mutually agreed 5am Sydney to 5pm NZ time zone. This hardly means the NZ dollar will stop trading outside of this bracket. On the contrary the NZ banks treat these hours as time in which they will always make prices to customers and other offshore banks. Outside of these hours NZ banks can continue to do so and go on making prices but it is likely that they do not choose to let go on off heir operations to other branches which are working outside of New Zealand. For example Price making of New Zealand dollar may be happening out of London or New York. So even if New Zealand banks may be remain closed on a particular day, foreign exchange trading in the NZ dollar will go on round the clock. Some traders who are into day trading NZD USD pair are of the opinion that it will stand to their advantage if they take position when a short term trend on the AUD/USD or other major currency pairs appear and NZD USD joins it a little later. Supposing that the trend on the major pairs goes on without any changes, sooner or alter NZD is bound to follow it. But if the trend is stopped, it is advised that the NZD position is closed even if it may mean incurring small loss. Many traders consider it a good idea. There aren’t any other disadvantages to this but for sudden unexpected spikes that may pop up out of nowhere. Other than this the concept is pretty acceptable. Some traders choose to trade exclusively during European and US sessions, but everyday before they start their day they sit back and spend time analyzing previous day’s Australian-Asian session. It particularly helps if they can analyze and are able to see through how AUD, JPY, and NZD move during this session. Traders who are aware of the exact time when serious trading starts are more accurate and successful in drawing right conclusions than those who are merely shooting in the dark with regard to active trading hours. Spread betting NZD USD Spread betting enables a trader to do trading based on the price volatility of currencies like NZD USD. A trader puts his/her stakes based on per point euro and in the eventuality of any profits that he is able to book during such a spread betting, stamp duty and any kind of capital gains tax are not levied on them. The application of Tax is based on peculiar circumstances associated with each customer. Laws related to Tax are like to undergo a change or even differ based on jurisdiction barring Ireland. When a trader decides to spread bet on currencies, what he is doing is just deciding if the prices are likely to increase or decrease and depending on his analyses trader fixes his / her stake size on what kind of money he wants to take a chance with. His profit or loss will be the variation between the price at which he manages to purchase it and the rate at which he is able to offload it in market – this amount is multiplied by traders total risked amount. Applying Pin Bar Reversal Method on NZD USD This piece of article is written keeping in mind traders focusing on NZD USD pair who are beyond basic learning, and are already trading the pair in real market environment. It will do them good if they take a step forward and learn the technicalities and workings that go behind what is called the pin bar reversal, especially with a fifty percent retracement entry, which brings a sort of a slight turn of event for a typical pin bar entry. As we discuss this, let us also understand the fact that it is just one of the several ways of trading pin bars available. And as they learn this, they should also find out how they can slot in and include horizontal lines to denote levels of confluence and act as filters. Traders should also understand that what they need in the market is a bias. They can expect a neutral bias provided market is trading between support and resistance within trading range. In short traders should learn about the key points in the market; support and resistance levels, and horizontal levels. Then look for and learn about basics of pin bar concept, which is about price action signals with long upper or lower tail. Once they get a clear hang of it, their trading sensibilities will be fine tuned and they have also managed to deal with the market one level better. Wishing you a happy weekend, safe trading and a reminder “no trading on Sunday”! You can find all relevant FAQ in regards to the above article here fxkeys/nzd-usd-new-zealand-dollar-us-dollar/
Posted on: Wed, 03 Sep 2014 08:50:30 +0000
Trending Topics
Recently Viewed Topics
© 2015