New Zealand dollar rises Swiss franc falls as risk trade returns

New Zealand dollar rises Swiss franc fall as risk trade returns

The kiwi topped performance charts an hour into U.S. trade, advancing 1.25% against the greenback. Risk appetite is back in full force as global equities and commodities bounced back overnight. The NZD/USD pair broke above the 100% Fibonacci extension taken from the June 16th and July 12th troughs at 0.8515, hitting fresh all-time highs early in New York trade. The pair encountered resistance just ahead of the 161.8% long-term fib extension taken from the June 2006 and March 2009 lows at 0.8560. The kiwi has been well supported since last week when a report showed that economic growth had nearly tripled expectations, easing concerns that the earthquakes slammed the isle-nation may weigh on growth prospects. Interim resistance holds here with topside targets seen at the 0.8575 and 0.86-figure. Support rests at the 85-handle, with subsequent floors seen at 0.8475 and 0.8420.

Key Levels/Indicators NZD/USD

Level/Indicator

Level

50-Day SMA

0.8147

20-Day SMA

0.8280

10-Day SMA

0.8368

2011 NZD High

0.8557

Supporting the risk trade was a stronger-than-expected print on the June housing starts and building permits which bodes well for the ailed housing market. The Swiss franc fell nearly 0.50% against the greenback and was the worst performer heading into the U.S. open. As risk appetite returns to markets traders unwound haven flows in favor of higher-yielding growth-linked assets. The losses come just one day after the USD/CHF pair made fresh all-time lows at the 161.8% Fibonacci extension taken from the June 15th and July 1st crests at 0.8077. Interim support rests at 0.8150 backed by the 161.8% extension with topside targets eyed at the 100% extension at 0.8245, backed by the 0.83-handle and 0.8315. Notwithstanding any further deterioration in the situation in Europe, the swissie is likely to continue to weaken as traders seek risk amid advances in equities and commodities.

Key Levels/Indicators USD/CHF

Level/Indicator

Level

50-Day SMA

0.8503

20-Day SMA

0.8335

10-Day SMA

0.8269

2011 CHF High

0.8038

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets.
E-mail: mboutros@fxcm.com

Twitter: @MBForex
WEB: www.fxcm.com

About the Author
Michael Boutros

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
WEB: www.DailyFX.com

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