NZD/USD currency pair is among the best in terms of the binary options trading. The currency is referred to as kiwi due to the popular fruit present in abundance in New Zealand. The fruit plays a major role in exports and the economy of the country, a case that impacts the currency pair.
Majority of exports of the milk powder to China comes from New Zealand. Therefore, any change in the economy of New Zealand such as GDP growth or slowing is quite significant. The situation is due to the fact that when the demand for the country’s product goes up, the price of milk also increases. The case is a major boost to New Zealand against the rival nations.
The traders are required to keenly monitor the activities of the Reserve Bank of New Zealand. The bank holds meetings on Wednesday each month. Occasionally, the press conferences and RBNZ’s sittings are held immediately after FOMC report in the U.S. and Fed meeting. Besides the most important activity to watch out is the dairy index commonly referred to as GDT index. Finally, the RBNZ sittings with the press conferences are essential to the traders.
One of the important economic releases to watch in New Zealand is the GDT index. The powder milk and prices of milk play a major role in the NZD price performance. The other factor to consider is the economic indexes such as the inflation rate, consumer prices, and GDP growth. The reason is that the RBNZ assess all the named factors when coming up with the interest rates. The journalists pose questions in the conference after the RBNZ rate decision. In the process, the traders are able to understand the future of the country’s economy and sentiments of the bank.
The United States economy is the largest in the world. Due to the reason, the economic events and reports are keenly watched by entirely every trader. The reports with significant effects are produced every week. The released monthly, Nonfarm Payrolls, and consumer price index are vital since the U.S. central bank has a dual mandate. The traders also need to understand the ISM index, in the manufacturing and Non-Manufacturing areas. The other important factors to consider are the ADP’s private payrolls, GDP growth, producer price index, retail sales, durable goods orders among many others.
When the decisions on interest rates are published by the central bank, then the New Zealand currency tends to portray sharp movements. The NZD/USD currency pair is sometimes challenging due to the small margin. The situation promotes instances of overtrading, a case that is not popular among many traders. The fluctuations in inflation and the consumer prices index possess a significant impact.
The positive swap and low margin of the NZD/USD currency pair attract many traders. Since the NZD rate is higher as compared to the United States, the interest rate differential between the USD and NZD turns out to be positive. The swap is regarded as the percentage paid to maintain a position overnight. The swap can be either positive or negative. When it is positive, then the trader is paid a percentage when one keeps the position for days exceeding one. On the hand when the swap is negative, the trader is supposed to pay for own position. Finally, the trader should be keen on the Federal Open Market Committee of the United States Fed. The reason is that any decision made has an influence on the USD.
Best Times to Trade NZD/USD
Since both New Zealand and Australia have the same economy and share the same geographical proximities, then they experience similar trading conditions. The NZD/USD faces high volatility from midnight to 0200 GMT. Between 0600 to 0800 GMT is the other time period when the volatility is increased. On the other hand, between 1200 and 1700 GMT is the part of the day that is most active. Sometimes, the NZD/USD currency pair is also active between 2100 and 0200 GMT.
The NZD/USD pair is an essential currency to trade with. The fact that New Zealand is among the greatest source of the milk powder possesses a major impact on the currency. The traders are advised to have knowledge of the decisions made by the Federal Reserve banks to optimize the profits. Finally, the traders should be aware of the ideal time when the volatility is high.