When traders first start trading Forex currency pairs, most training materials tell you that there are six main crosses.
The New Zealand dollar is certainly not one of them, but there are some exciting aspects of the behavior of this pair that make trading this financial instrument quite profitable.
First, when you look at any new currency pair for you, you need to find out what makes the economies of countries work. This way, you can anticipate changes when you hear the news.
If we take the euro primarily, then this is the currency shared by 19 EU countries, the most notable exceptions are the UK and Switzerland, which decided to stay with their native money.
This immediately causes a complication. There are both weak and healthy economies in the euro currency system. As a rule, Germany is called the strongest, followed by France, Italy, and several others.
But even Italy has allowed some bad decisions to damage its economy. At the other end of the spectrum, you have countries such as Greece, Slovenia, Estonia, and others that do not contribute so much to the health of the euro.
There were even suggestions that Greece could also leave the European monetary system, returning to the drachma, but since this option was not yet included in the original contract, no one knows how it will turn out in practice.
Given the size of the economies of Germany and Greece, it is unlikely that such actions by Greece will lead to a fall in the euro, and the German industrial machine will continue to dominate other countries and will determine the strength of the euro.
Although at this stage, there is no clear plan to get the eurozone out of the crisis, the rest of the economies of large states do not look any better. The USA has a negative trade balance, China is slowing down the pace of industrial development, and international trade is falling.
In contrast, New Zealand is struggling to get out of its financial problems when it increased its public debt several years ago.
For New Zealand residents, the quality of life is improving in every way and is at an excellent level. The country had its problems when its unique trade relations with Great Britain were nullified by the accession of the United Kingdom to the European Community.
Now she has a lot more trade with Australia and Asia. The state economy is primarily based on agriculture, the export of meat and dairy products, as well as wool and other goods. It is a producing country, and its economy depends on how commodity prices change.
With rising energy costs, New Zealand is in an excellent position, since most of the electricity is generated by hydropower plants, which reduces the need for energy imports.
If you want to extend the rate to EUR/NZD, you should pay attention to the usual economic indicators, such as inflation, unemployment, and gross domestic product.
The publication of news and reports in this area very much animates the cross and makes it quite volatile, with the opportunity to get the right margin. To calculate bids, you must also follow technical indicators, such as MACD on charts.
Let’s look at a simple example: If you think that the euro will increase in price compared to the New Zealand dollar, take a long position on this currency pair, buying at 16,039.4 with a share of, say, 4 dollars per point.
If the price rises, as expected, you can close the winning bet when the quotation reaches 16 256.3 – 16 270.3. In this case, the profit will be:
With a daily sliding cross bet, you can receive a small amount of interest every evening when the chance was prolonged, but this usually does not affect profits too much.
Therefore, this tool is based on an in-depth fundamental analysis of the market and opens only for long-term positions. In this format, the opportunity to get a good profit is much higher.
As for risks, they are also present and are associated with two factors: an unexpected change in the ECB policy and sharp jumps in the commodity market.