Market Analysis: The Day’s Best Performing Currency!

The best performing currency of the day is the New Zealand Dollar, while the worst performing is the Swiss Franc.  However, due to the larger spread, which is traditional to this pair, investors hold on for larger price movements. On the 2-hour chart the price of the exchange has continuously traded above the 75-Bar EMA since the 13th May and is trading almost 3.50% higher over the past month.

The price of the exchange rate has consecutively been on the rise for six consecutive weeks which is uncommon for the NZDCHF. However, investors should also note that the price is trading 5.30% lower than the average price seen over the past 3 years. Therefore, investors potentially may be looking at longer term gains due to the low entry levels. However, in order for the trend to continue the New Zealand economy will need to maintain stability with high interest rates.

The upward price movement is largely due to the high inflation in New Zealand and the central banks reluctancy to indicate a rate adjustment in the near future. In addition to this, the Swiss National Bank also is believed to be one of the most bearish central bank globally. New Zealand’s inflation rate is continuing to decline and is not witnessing a slowdown like the US. However, the inflation rate remains at 4.00% significantly higher than Switzerland’s 1.4% inflation rate.

New Zealand’s first quarters core retail sales index rose 0.4% from –1.6% previously, better than analysts’ neutral forecast, and retail sales rose 0.5% from –1.9% previously and –0.3% expected. The April figure for exports was 6.42B New Zealand dollars and imports 6.32B New Zealand dollars, increasing the trade surplus by 91.0M New Zealand Dollars.

Today the New Zealand Dollar Index is trading 0.41% higher. However, investors continue to monitor the rise in tensions between China and Taiwan which potentially could change the sentiment towards certain currencies if escalations worsen.