Thanks to a dual downgrade of their credit rating in New Zealand, the Kiwi has fallen to 6-month lows vs. USD. Part of the reason is also because of the risk aversion in the markets due to the Euro debt crisis, which is seemingly a reason for just about everything being lower.
However, the Kiwi is taking an extra hit because China is seeing its economy slowdown, as evidenced by declining PMI figures. Much of the NZ economy relies on exports to China so if Chinese demand declines, so will NZ exports. We saw on Monday worse than expected trade balance figures for NZ, which prove this point.
Nevertheless, the Kiwi does experience a positive interest carry and is currently sitting on its S1 daily pivot support just above 76 vs. USD. With the usual pattern of “risk on” to start the week and “risk off” to end the week, I can see the Kiwi holding the S2 pivot support just ahead of 75 so I’m looking to buy NZD/USD at 75.5 (should it get there) on a test of that support, with my stop just below 75.