Tips to Trade New Zealand Dollar Currency Pair
NZD or New Zealand Dollar is 10th highly traded currency in the world. In the year 1967, it officially came into existence. It is illustrated by ‘$’ but as it belongs to New Zealand sign is prefixed with alphabets NZ – ‘NZ$’. Thus it stands out from the other dollar currencies. Besides, NZD currency is accepted in Tokelau, Niue, Pitcairn Islands and Cook Islands also.
Factors that affect the Forex market
According to iForex economists, universal factors affecting currency pair rates include are –
· Flow of exports and imports between the countries
· Comparative price increase percentage
· Capital flow between two countries
· Variation limits forced by government
· Trade balance related to commodities
· Comparative development
· Economy’s inflation rate
· Long-term and short term interest rate similarity or difference
· Borrowing cost
Tips to trade in NZD
Kiwis are technologically progressive country displaying constant growth in their GDP. The export and import of farming resources are the mainstream of their income and development. Almost 80% of GDP comprises of agricultural sector. Their business partners include strong countries like USA, China, Japan and Australia.
Factors that affect NZD currency trading
New Zealand population is very small in size, so a mild movement like relocation can severely affect its economy. Another issue that can arise due to the weather conditions, can damage the exchange rate.
Traders have to consider one thing that the stability of NZD is directly connected to Australia’s economic condition because they are one of their biggest clients. NZD is commodity based currency, so an increase in commodity price appreciates NZD rates.
NZD & Gold
NZD exports various goods and items to Australia. When AUD currency strengthens due to high gold prices, NZD uses this opportunity. In this situation it exports maximum goods because AUD enjoys high purchasing power. Alternatively, when gold prices dip and AUD weaken, the export also plummets.
Before you decide to enter the Forex market, it is wise to –
· Decide why you desire to trade Forex?
· Analyse your strengths & weaknesses
· Learn to handle risk & failure
· Set trading goals
· Control your emotions
· Keep your mind steady
· Treat trading logically
Let’s discuss NZD/USD currency pair
Organize your daily routine– The first thing that you need to do is watch, read, check and hear major economic news, and then study your daily charts. Afterwards, review the existing trades from previous sessions. Identify and add potent trades for the Forex pairs like NZD/USD. Also, add this new trade details in a spread sheet.
Weekly trading routine– Check and watch webinar footage to understand ‘Knowledge to Action’ skill. Reading news, articles and analysis is also included in a weekly routine. Next, study and analyse the charts, and use demo trading to apply various strategies.
Timing NZD/USD trades
Timing is very significant in Forex trading. It really helps a lot to distinguish which timeframe will be best for your preferred currency pair trading and style. There are no significant hours for NZD trading markets, but a mutually agreed time zone 5 Am Sydney – 5 Pm NZ time zone is followed. It does not mean that NZD stops trading, but it is the New Zealand banks that follow these hours to deal with customers and offshore banks.
The key points to learn are the support & resistance levels, and price action signals. Once traders get their trading responsiveness tweaked, they can handle volatile market conditions even better.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.