Nzdusd - page 18
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NZD/USD: Kiwi Pecks at $0.73 in Calm Session
The dollar was slightly lower against commodity currencies and the NZD/USD pair was seen elevated on Monday as some profits were taken from Friday's smackdown.
Friday’s US inflation data boosted the greenback, leaving the kiwi in the dust. Consumer prices on a year-on-year basis fell to -0.2% from -0.1% in April, meeting market expectations. The core inflation indicator remained at 1.8% and improved by one notch to 0.3% month-on-moth. Analysts have interpreted the unimpressive price growth figures as encouraging due to continued growth in services.
"The US dollar was firmer against all the majors with a stronger than expected CPI and comments by Janet Yellen underpinning the greenback. Core CPI for April was a touch better than expectations, helped by a jump in medical care costs. Fed chair Janet Yellen said lift-off is still likely to be this year but she remained cautious on the economic recovery. Yellen wants to see further improvement in the labour market although she acknowledged it is approaching full strength," Stan Shamu at IG wrote in a research note on Monday.
Investors will try to look past the worrisome Q1 GDP data and will watch this week's US macro figures, including durable goods orders, consumer confidence and the second estimate of Q2 GDP, which is expected to print -0.9%, sharply lower than the first estimate of 0.2%.
"Concerns around Q1 were attributed to a variety of transitory factors that occurred at the same time including weather and disputes at ports on the West Coast. This helped calm some concerns the Q1 sluggishness will stick around for longer. Continued improvement in the labour market and confidence that inflation will move back to 2% over the medium term will be key to initiate policy normalisation," Shamu added.
In the previous week, the GDT Price Index fell 2.2 %, as the average price was $2,472, compared to the May 5 reading of $2,515. It was the fifth consecutive fall in prices at the international auction. This undermined the kiwi further.
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I look for a short on NZDUSD because there's a chance of a further NZD rate cut and also the USD starts to get stronger again by improving US data.
New Zealand April trade balance: +123m (expected +98m)
New Zealand April trade balance, +123m
Exports, 4.17bn
Imports, 4.04bn
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From Stats NZ:
NZD/USD: Kiwi Edges Higher as Greenback Bulls Take Breather
The New Zealand dollar stabilized well above the $0.72 handle as the US dollar bulls took a breather after a solid performance in the previous session.
The so-called kiwi rose 0.61% and traded at $0.72639 against the US currency, extending gains and hovering around the fresh intraday high.
In the previous session, the New Zealand currency suffered a blow as the US dollar strengthened broadly following the solid US durable goods data. The greenback also drew strength from the latest comments of Fed Chair Janet Yellen who said the central bank still sees the first interest rate hike in its borrowing costs to occur at some point this year.
The tightening of US monetary policy will most likely be gradual, Yellen added.
“The various headwinds that are still restraining the economy, as I said, will likely take some time to fully abate, and the pace of that improvement is highly uncertain," Yellen noted.
“We have no intention of embarking on a pre-set course of increases in the federal funds rate after the initial increase,” she added.
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Kiwi Falls as Weaker Business Confidence Adds to Rate-Cut Case
Fresh signs that the New Zealand economy may be in need of some extra TLC popped up on Friday, sending the New Zealand dollar lower against the greenback.
ANZ's Business Outlook survey revealed on Friday that a net 16% of businesses were optimistic in May, down sharply from 30% a month earlier.
The NZD/USD pair fell 0.50% to $0.7139 two hours before market open in Frankfurt on Friday, down from $0.7176 on Thursday evening in New York. The Australian dollar gained 0.79% on the kiwi to trade at $1.0730 at the same time.
Worryingly, the survey showed that inflation expectations were at an all-time low of 1.6% in May, which is below the Reserve Bank of New Zealand's (RBNZ) 2% target midpoint.
The RBNZ has been clear that if inflation expectations continue to wane monetary policy would need to be adjusted.
Already there has been a growing number of economists who expect the RBNZ to cut the Official Cash Rate (OCR) this year, however the bank has signaled that two criteria need to be meet before cutting. One of which is weaker demand, the other that wage and price setting outcomes settle at levels lower than what is consistent with the inflation target.
There has already been recent evidence that wage outcomes are being affected by low inflation settings, and today's survey results strongly suggest firms are adjusting price settings to low inflation.
"If the Reserve Bank were to cut the OCR, it would most likely happen around September or October," Westpac chief economist Dominick Stephens wrote in a note on Thursday. "However, we think the odds of this happening are probably a bit shy of fifty-fifty – it is slightly more likely that the OCR will remain on hold all year."
In contrast ASB bank changed their OCR call early this month from no change this year, to two cuts, one in September followed by another in October. ANZ economists are also picking two cuts this year, but BNZ's team believe the case is not yet strong enough for policy loosening.
source
NZD/USD forecast for the week of June 1, 2015
The NZD/USD pair broke down below the recent lows in order to test the 0.71 handle. We believe that this market is very easily going to head to the 0.70 level, and could potentially even break below there. Remember, the New Zealand dollar is highly leveraged to the commodity markets, so it’s possible that you might have to pay attention to the overall “ceiling” of futures markets. New Zealand is a necessarily known for a specific commodity, generally thought of as an agricultural exporter, but the currency does tend to have a natural sympathy when it comes to the attitude of commodity traders. The giver this way, it’s a great “risk barometer” as the markets will generally drive this pair based upon whether or not people are willing to buy riskier commodities or currencies in general.
We believe that the 0.70 level is almost a given at this point, simply because it is the next large, round, psychologically significant handle. Pay attention to the Australian dollar against the US dollar as well, because the 2 pairs tend to move in tandem. That market looks like it’s testing pretty significant support as well, and if it’s able to break down below the 0.75 level, it’s our believe that the New Zealand dollar will in fact break down below the 0.70 level in sympathy. With this, you also have to watch whether or not the Australian dollar bounces off of that level, because it could show that this market will struggle to get below the 0.70 level, and then you would have to be very careful about any selling positions.
Nonetheless, if we did get a bit of a bounce though, we would look at that as a potential selling opportunity down the road. We have a hard time believing that the overall trend is going to change and that we are going to break through all the noise above, and it appears now that the sellers are firmly in control when it comes to this particular currency pair at the moment.
Good support at the 0.7100 for the NZDUSD.
NZD/USD: Buck Shakes Off ISM Punches, Halts Further Weakness
The greenback was seen trading with a slight gain against the kiwi on Wednesday afternoon, however stuck close to yesterday's intraday action, when the NZD/USD cross had experienced several up and down swings.
The kiwi regained momentum as the US macro calendar started unveiling fresh updates. The ADP's employment in May brought no surprise, while the services sector showed a severe and unexpected decline in May according to the latest data.
"It may kind of fan some fears that the Spring recovery is not materializing," said Commonwealth's market analyst Omer Esiner. "That could ultimately postpone any move by the Fed."
The NZD/USD pair fell 0.43% to trade at $0.7151, erasing part of earlier losses as the kiwi hit its intraday low at $0.7117 before the US market hours.
Mixed US data
In the morning, traders in the US sought the ADP employment report, as it is considered the forerunner to Friday's non-farm payrolls. May's figure rose almost in line with expectations, reaching 201,000 from 165,000 booked previously. The latest update also came in 1,000 jobs above the expectations of a hike by 200,000 in May.
However, the pro-dollar sentiment suffered amid services sector data. First, the services PMI by Markit Economics slipped to 56.2 points in May from 56.4 booked in April, while the more closely watched Institute for Supply Management (ISM) non-manufacturing composite dived to an eleven-month low in May.
Later during the US trading session the Federal Reserve (Fed) will releasing its Beige Book and Chicago Fed President Charles Evans is scheduled to speak at a banking symposium in Chicago.
Meanwhile in New Zealand, the RBNZ announced new policy measures aimed at tackling Auckland's rapid house-price inflation in May, and today released a consultation paper outlining the potential impact of the new measures.
According to the bank, the measures could slow house-price inflation in Auckland by 2-4%. In April, Auckland house prices grew 18% year-on-year, according to the Real Estate Institute of New Zealand (REINZ) data. The RBNZ's proposed new policy measures mean property investors in Auckland would need to front up with a 30% deposit.
NZD/USD forecast for the week of June 8, 2015
The NZD/USD pair initially tried to rally during the course of the week, but as you can see broke down to a fresh, new low. With that being the case, we feel that the market is getting ready to test the 0.70 level, which will be psychologically significant. However, once we get below there we can continue to go much lower, probably heading to the 0.65 level. We have no interest in buying this market because it is so bearish overall. Given enough time, we believe that this market is going to break down significantly at this rate.
source
NZD/USD: Kiwi Jumps on Buck's Lie-In & Obama Buzz
The US dollar was suffering under the greenback's general 'hangover' against most of its major FX peers on Monday and was also bleeding against the kiwi. Bulls therefore missed the opportunity to roll on with the non-farm payroll's momentum as the macro calendar brought only second tier updates that gave no chance for last week's sentiment to further prevail.
However, the kiwi still found itself in the strong downward channel lasting for almost the last six weeks, with the current trendline resistance above the $0.71 level. Overall, the one day setback for the US dollar might just provide a window for the kiwi to regroup, as the main fundamentals ahead of the crucial Federal Reserve (Fed) meeting starting June 16 are kept in place on the US side.
Nevertheless, investors remained skittish as proven earlier today when a leak from an unknown French official hit the markets, indicating that the US President Barack Obama saw ''a problem'' in the strong dollar during a conversation at the Group of Seven (G7) summit in Garmisch-Partenkirchen, Germany.
"I did not say that and I make it a practice of not commenting on the daily fluctuations of the dollar or any other currency," Obama said at a news conference in reaction to the rumors.
Unfortunately for the US dollar, the reaction to the official rebuttal by the White House was limited, so the NZD/USD cross was trading 1.38% elevated at $0.7137, while the US dollar index, shortly before the closing bell showed a profound intraday loss of 1.12% at 95.29 points.
As mentioned, the new week started at a slower pace with economic updates, as the only one came in the form of the Fed's Labor Market Conditions Index for May, hitting 1.3 points in May, after an upwardly revised reading of -0.5 booked in April.
Meanwhile, the markets still echoed with Friday's buoyant non-farm payrolls showing the US economy created 280,000 new jobs in May, heavily topping the 226,000 jobs increase expected by analysts and boosting speculation over the timing of the Fed's rate lift-off.