The NZD/USD currency pair shows the value of the New Zealand dollar against its American counterpart. NZD is the base currency in the pair, while USD is the quoted one. Basically, this means how many US dollars are needed to buy one NZD. Among professional currency traders, NZD/USD is known as the “kiwi” which also refers to the New Zealand dollar. Nowadays, NZD is quickly gaining popularity on Forex. This is hardly surprising since New Zealand’s rapid economic development supports investor confidence. NZD/USD is perhaps one of the most interesting currency pairs in the forex market. The kiwi became popular among traders just ten years ago. Now, the NZD/USD turnover in the global financial markets has reached 10% which is quite an impressive result. The pair is often chosen by those who avoid stressful trading and prefer a steady and balanced approach instead. This makes it the best choice for novice traders with little experience. There are some distinctive features that usually determine the pair’s trajectory. First of all, NZD/USD is considered a commodity pair. The rate of the New Zealand dollar highly depends on agricultural and mining industry exports, the country’s main source of revenue. Therefore, the kiwi’s rate is often determined by such factors as prices for oil and precious metals as well as by weather conditions that directly influence the agricultural sector of the country. Another characteristic of NZD/USD is its positive correlation to the AUD/USD currency pair. This is not surprising since the economies of New Zealand and Australia belong to the same region. Both the Australian and the New Zealand dollars are sensitive to the same factors, including the price of precious metals and weather forecasts. If the precious metals market drops or weather conditions deteriorate, both currency pairs depreciate. The opposite correlation is observed as well, however, with less dependence on improving weather conditions. All this means that the NZD/USD and AUD/USD currency pairs are moving in one direction most of the time. The third feature of the pair is connected with its average level of daily volatility which hardly exceeds 100 pips. On the one hand, the profit from trading the pair will not be huge. On the other hand, this allows you to avoid serious losses which is a big advantage for beginners. The next feature of the pair is associated with the period of its highest trading volume. The pair reaches the peak of activity during the opening hours of the European session, that is, starting from 7:00 GMT. Accordingly, the trading activity on the pair slows down when the European session ends at 15:00 GMT. The rest of the time, its trading volume is rather low. Moreover, NZD/USD can be easily understood with the help of all types of market analysis. This final feature makes the pair a convenient trading instrument on Forex. The most effective strategies for the NZD/USD pair are the medium-term and long-term trading. Some traders recommend using the scalping strategy. However, it may only be effective when trading with a large deposit.
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