I praised the virtues of the Australian dollar (AUD) last week. It has been beaten up for a while now and I had seen the signs of a turnaround in the fortunes of the AUD.

It has risen more than 2 percent in the past week and I suspect we are just getting started on this surge. There is a lot more appreciation to come during the next few weeks.

I didn't extend my praise to the kissin' cousin of the AUD, the New Zealand dollar. The "kiwi" (NZD), as it is often called, often rides the coat-tails of the rise in the AUD and has been a good source of income for me in the past few years.

I am seeing signs of a nice turnaround in the New Zealand economy, which is going to bode very well for the investor. While there will be pressure on the NZD to appreciate as the AUD does, the benefits of a strengthening economy will blow wind into its sails and make sure the appreciation quickens.

Let’s start with the housing data in New Zealand. The overall number of homes sold increased by 19 percent month over month and 24 percent year over year. These are very robust numbers for the growth being seen there.

Add to that the median price of the homes has increased by 5.5 percent year over year. Not only are we are seeing an increase in sales, but an increase in prices as well. The median number of days to sale is also dropping by 16 percent year over year. This is a very nice sign, in perfect tandem with each other. The rebound is beginning in all earnest. This will also ease the pressure on the Central Bank of New Zealand from having to reduce interest rates, which is great news for bond holders.

Moving on to the retail sector, there is excellent news here as well. The retail sales as measured by electronic card spending have increased once again in May. It has increased by 3.3 percent year over year. This is after a strong number in April as well. This means that annual growth is on the rise in New Zealand.

If we start looking at the combined effects of the two major sectors of growth in New Zealand, we can see the beginnings of a steady return to growth.

Add to this the upward pressure on the AUD due to the rebound in gold prices, and you have a perfect situation for a decent 5 to 7 percent increase in the value of the NZD in the next few weeks.

The risk to this trade is a sudden jolt in the U.S. dollar (USD). If we see another panic attack and a strong resurgence of the USD, we can see some weakness in all currencies, but I do not see that lasting the whole summer.

I would recommend a similar option trade for the NZD as I had suggested for the AUD. The advantages of using an option strategy rather than an ETF has been enumerated last time and this time as well, we will see some handsome profits in the NZD trade.