NZDUSD Technical Analysis 2014, 07.12 - 14.12: Bearish Breakdown

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newdigital, 2014.12.05 16:29

Forex Weekly Outlook December 8-12

Rate decision in New Zealand and in Switzerland, US Retail sales, Unemployment claims, Producer prices and Consumer sentiment are the major events for this week. Here is an outlook on the highlights coming our way.

Last week, Non-Farm Payrolls posted a superb job gain of 321,000 in November. The release also showed a 0.4% rise in wages. The unemployment rate remained unchanged at 5.8%. This was the biggest jobs gain since 2012, far above average of 224,000 a month over the past year. Economists expected an expansion of 231,000 positions. This excellent release demonstrating the ongoing improvement in the job market cannot go unnoticed. The Fed will have to reexamine its zero rates policy in the coming weeks.

1. NZ Rate decision: Wednesday, 20:00. New Zealand’s central bank maintained its Cash rate in September at 3.50%, implying they will keep monetary policy on hold until the end of next year, contrasting the U.S. Federal Reserve plans of raising rates. Low inflation and slowing global growth were the reasons behind the decision to keep rates unchanged. Rates are expected to remain unchanged.
2. Australian Employment data: Thursday, 0:30. Australia’s job market added 24,100 jobs in October. Full-time positions expanded by 33,400 while part-time roles declined by 9,400. The jobless rate remained unchanged at a 12-year high of 6.2%, suggesting a weaker labor market amid the economy’s transition from mining-driven growth. The participation rate edged up to a seasonally adjusted 64.6% compared to 64.5% in the previous month. These figures indicate a modest improvement and a positive trend. Australia is expected to gain 15,200 jobs in November, while the unemployment rate is predicted to reach 6.3%.
3. Switzerland rate decision: Thursday, 8:30. The Swiss National Bank kept its Libor rate at the minimum low of 0.0% to 0.25%, in line with market prediction. SNB policymakers also issued updated forecasts for growth and inflation revealing a moderate pickup in the coming months. The Central Bank expects GDP growth to reach 2% in 2015. Inflation is expected to reach 2% in 2014 and only 0.6% in 2015. Libor rate is expected to stay unchanged this time.
4. US retail sales: Thursday, 13:30. U.S. consumers increased their spending in October, reaching $444.5 billion, on a seasonally adjusted basis, rising 0.3% compared to September’s decline of 0.3%. Economists expected a smaller rise of 0.2%. Consumers were more optimistic and made more purchases. October’s core sales, excluding autos, edged up 0.3% from a 0.2% decline in September. Analysts predicted a 0.2% gain in October. Falling gasoline prices helped to increase domestic expenditures leading to stronger holiday sales. Retail sales are expected to gain 0.3% in November while core sales are predicted to rise 0.1 %.
5. US Unemployment claims: Thursday, 13:30. The number of initial claims for unemployment benefits fell back below the 300,000 line last week, indicating continued growth in the labor market. He reading was broadly in line with market forecast. The four-week average increased by 4750 to 299,000 still near post-recession low. However, the sharp decline could be attributed to Thanksgiving holiday. The number of new unemployment claims is expected to be 299,000 this time.
6. US PPI: Friday, 13:30. The producer price index gained 0.2% in October amid a pickup in inflation. Prices for many products increased despite a decline in wholesale gas costs. Automakers contributed to inflation by introducing 2015 car models. Beef prices jumped 6% and pork prices surged 8.1%. Meanwhile, core PPI excluding the volatile categories of food and energy, increased 0.4%. However, the rise in PPI does not reflect a trend, since the ongoing declines in fuel prices boost sales boosting inflation. The producer price index is predicted to fall 0.1% in November.
7. US Prelim UoM Consumer Sentiment: Friday, 14:55. U.S. consumer sentiment edged up in November to a more than seven-year high of 89.4 points, compared to 86.4 posted in September. Economists predicted a reading of 87.3. The ongoing growth in the employment market and the sharp drop in gasoline prices, boosted sentiment. Current economic conditions increased to 103.0 from 98.3 beating forecast of 98.8. Consumer expectations increased to 80.6 from 79.6, exceeding the 80.2 forecast. However, expectations for income gains remained low despite rising and came in below inflation forecasts. One-year inflation expectation declined to 2.6% from 2.9%, while its five-year inflation outlook was also at 2.6%. U.S. consumer sentiment is expected to improve further to 89.6 this time.

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newdigital, 2014.12.07 20:16

Forex - Weekly outlook: December 8 - 12

The dollar rallied to fresh multi-year highs against a basket of other major currencies on Friday after a particularly strong U.S. employment report prompted investors to bring forward expectations for a hike in U.S. interest rates.

The Labor Department reported that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

September’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.

The unusually strong data saw investors bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 before the report.

The dollar has strengthened in recent months on the back of the diverging monetary policy stance between the Federal Reserve and central banks in Europe and Japan, who are expected to continue monetary easing.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

USD/JPY hit seven year highs 121.69 and was last at 121.43, up 1.38% for the day. For the week, the pair jumped 2.17%.

EUR/USD fell to two-year lows of 1.2272 and settled at 1.2281, off 0.78% for the day.

The euro had moved broadly higher on Thursday after European Central Bank President Mario Draghi indicated that it would not embark on quantitative easing for now, saying the bank would reassess its stimulus program in the first quarter of 2015.

Sterling fell to 15-month lows, with GBP/USD down 0.56% to 1.5583 in late trade, while USD/CHF ended at 18-month highs of 0.9790.

The Canadian dollar fell to more than five year lows against the greenback on Friday, following the release of unexpectedly weak domestic jobs data.

Statistics Canada reported that the Canadian economy shed 10,700 jobs last month, compared to expectations for jobs growth of 5,300.

USD/CAD hit highs of 1.1476 before pulling back to 1.1435 in late trade, still up 0.46% for the day.

In the week ahead investors will be awaiting Thursday's U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

China is to produce what will be closely watched reports on trade, consumer prices and industrial production. Central banks in New Zealand and Switzerland are also to hold policy setting meetings next week.

Monday, December 8

• Japan is to release final data on third quarter gross domestic product and a report on the current account.
• China is to publish data on the trade balance, the difference in value between imports and exports.
• Switzerland is to publish reports on retail sales and consumer price inflation, which accounts for the majority of overall inflation.
• Later Monday, Canada is to produce data on building starts and housing permits.

Tuesday, December 9

• Australia is to publish private sector data on business confidence.
• The UK is to publish a report on industrial and manufacturing production.

Wednesday, December 10

• Australia is to produce private sector data on consumer sentiment, as well as official data on home loans.
• Japan is to report on its BSI manufacturing index.
• China is to publish data on the consumer price index.
• The U.K. is to release data on the trade balance.
• Later in the day, the Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.

Thursday, December 11

• Japan is to release data on core machinery orders and tertiary industry activity.
• RBNZ Governor Graeme Wheeler is to testify before the Finance and Expenditure Select Committee in Wellington. His comments will be closely watched.
• Australia is to publish data on the change in the number of people employed and the unemployment rate.
• The Swiss National Bank is to announce its libor rate and publish its monetary policy assessment. The bank is to hold a press conference to discuss the monetary policy decision.
• Later Thursday, Bank of Canada Governor Stephen Poloz is to speak at an event in New York.
• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• China is to release data on industrial production and fixed asset investment.
• The euro zone is to publish a report on industrial production.
• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

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newdigital, 2014.12.07 21:01

NZD/USD weekly outlook: December 8 - 12

The New Zealand dollar fell to a four-week low against its U.S. counterpart on Friday, as stronger than forecast U.S. nonfarm payrolls data bolstered bets that the Federal Reserve will begin to raise rates sooner than previously thought.

NZD/USD hit 0.7700 on Friday, the pair's lowest since November 7, before subsequently consolidating at 0.7715 by close of trade on Friday, down 0.86% for the day and 1.61% lower for the week.

The pair is likely to find support at 0.7659, the low from November 7, and resistance at 0.7821, the high from December 4.

The U.S. dollar rallied after the Department of Labor said that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

October’s figure was revised up to 243,000 from a previously reported 214,000, while the unemployment rate remained unchanged at a six-year low of 5.8%.

The upbeat data added to the view that the strengthening economic recovery may prompt the Federal Reserve to raise interest rates sooner than markets are expecting.

The US dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

In the week ahead investors will be awaiting Thursday's U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

A policy decision by the Reserve Bank of New Zealand on Wednesday will also be in focus.

Meanwhile, China is to produce what will be closely watched reports on trade, consumer prices and industrial production in the week ahead. The Asian nation is New Zealand's second-largest trade partner.

Monday, December 8

• China is to publish data on the trade balance, the difference in value between imports and exports.

Wednesday, December 10

• China is to publish data on the consumer price index.
• Later in the day, the Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.

Thursday, December 11

• RBNZ Governor Graeme Wheeler is to testify before the Finance and Expenditure Select Committee in Wellington. His comments will be closely watched.
• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• China is to release data on industrial production and fixed asset investment.
• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

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newdigital, 2014.12.07 21:12

NZD/USD forecast for the week of November 8, 2014, Technical Analysis (based on fxempire article)

The NZD/USD pair tried to rally during the course of the week, and as a result we turned back around and fell rather hard. We tested the 0.77 level, which of course was a significant support barrier. With that, we feel that a break down below the recent lows would be a reason to start selling the New Zealand dollar again, as the Royal Bank of New Zealand continues to work against the value of the Kiwi dollar. After all, they have recently suggested that this pair should be down to the 0.68 level. With that being the case, we feel that the central bank out of Wellington will continue to favor a weaker New Zealand dollar, as they have not only express their opinion verbally, but they have actually stepped into the market in order to sell.

Any rally at this point in time should continue to show weakness eventually. The 0.80 level continues to be the “ceiling” in this market, as it has been so reliable for the sellers recently. Ultimately, we believe the 0.75 level should be tested first, and then possibly down to the 0.70 level. Whether or not we can get down to the 0.68 level is of course a completely different conversation altogether. Ultimately, this should be one of those markets you can sell every time it rallies as the New Zealand dollar certainly is overvalued and is so highly influenced by the commodity markets. The commodity markets look horrible in general, and as a result the US dollar should continue to be favored overall, giving us a bit of a “one-way trade” going forward.

The market has been reliable for some time, and the market consolidating was simply the sellers taking a breather in our opinion. Quite often, you will see markets make impulsive moves like we did a couple of months ago, and then simply grind sideways. Eventually, and the trend continues and we think that’s about to happen going forward in this marketplace. It doesn’t mean they’re ready to go lower yet, but if we make a fresh new low that’s reason enough for us to start selling.

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newdigital, 2014.12.08 05:50

NZD/USD Technical Analysis: Clearing Path Below 0.76 Mark? (based on dailyfx article)

• NZD/USD Technical Strategy:Flat
• Support: 0.7659, 0.7525, 0.7386
• Resistance:0.7802, 0.7937, 0.8034

The New Zealand Dollar is attempting to accelerate downward in a bid to clear a path below the 0.76 figure against its US counterpart. Near-term support is in the 0.7659-96 area, marked by the November 7 low and the 23.6% Fibonacci expansion, with a break below that on a daily closing basis exposingthe 38.2% level at 0.7525.Alternatively, a reversal above the14.6% Fib at 0.7802clears the way for a challange of the 23.6% Fib retracement at 0.7937.

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Something Interesting in Financial Video December 2014

newdigital, 2014.12.09 06:06

EUR/USD slumps, USD/JPY jumps, Crude slides as USD advances post NFP

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newdigital, 2014.12.11 07:23

NZDUSD Technical Analysis (based on dailyfx article)

Resistance	Support
0.7930	0.7787
0.8076	0.7624
0.8221	0.7533

The New Zealand Dollar launched sharply higher against its US namesake following the RBNZ monetary policy announcement. A daily close above the 0.7897-0.7930area marked by the 23.6% Fibonacci retracement and a falling channel top exposes the 38.2% level at 0.8076. Alternatively, a reversal below the 14.6% Fib at 0.7787 opens the door for a test of the channel floor at 0.7624.



We will tactically opt against entering long. The markets appear enveloped by seasonal profit-taking on risk-geared positions, as expected. That may bode ill for the sentiment-sensitive Kiwi, meaning the up move might swiftly fizzle. As such, we will remain flat and look for the bounce to yield a selling opportunity in line with the larger trend.