Nzdusd - page 20
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NZD/USD Forecast June 22-26
The New Zealand dollar remained on low ground after receiving more blows from the central bank and despite a weak USD. The focus now shifts to trade balance.Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
Milk prices failed to rise and dropped by 1.3% but the bigger blow to the kiwi came from the GDP report: the economy grew by only 0.2% in Q1, much lower than 0.6% expected and on top of a downwards revision. This erased the gains that the kiwi enjoyed following the dovish message coming out of Washington: the Fed is set to raise the rates only very gradually. This hurt the USD across the board, but less so against the NZD
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Good support for the NZDUSD at the 0.6900 level, but a break below that level may cause the bearish momentum to accelerate.
The NZDUSD retraces above the 0.6900 level, but the bearish trend is still in place in this pair.
NZD/USD: Kiwi Recovers as Buck Disregards Busy Morning
The kiwi slightly advanced against the greenback on Thursday and managed to keep its early morning gains throughout the data-heavy morning in the US.
However, the NZD/USD pair stayed in a sharp downtrend despite the kiwi's recent testing of the falling trendline around the $69 level. Once the attempt to escape from the current bearish trend proves to be unsuccessful, the pair might revisit its five-year bottom at $0.6812 seen on June 23.
Thursday afternoon, the NZD/USD increased 0.37% to trade at $0.6909, hovering slightly below an intraday high at $0.6925, while the US dollar index gave up 0.01% to 95.44 as the buck lost the momentum that drove the index to the two-week high at 95.88 reached on Wednesday.
Eventful US morning
The US macro calendar brought several macro updates, forcing the greenback to handle various inputs, most importantly the closely watched PCE Index update for May - the benchmark measure of inflation used by the Federal Reserve (Fed).
The Bureau of Economic Analysis published the PCE headline index in line with expectations in May, reaching 0.2% on a year-on-year basis, the same level as the upwardly revised reading booked in April. Meanwhile, the core PCE index hit 1.2% in May on the same basis, marginally declining from the revised 1.3% seen previously.
Meanwhile, the weekly update of initial jobless claims unveiled its sixteenth consecutive update under 300,000 during the week ending June 20, as the Department of Labor reported that 273,000 Americans had filed for unemployment benefits.
Also today, the Fed Governor Daniel Tarullo held a speech in Boston about stress testing of the US financial system.
Meanwhile, the Fed Governor Jerome Powell appeared in Kansas City at the Fed organized conference about innovation and payment security for financial markets saying, "technological innovations can provide substantial benefits to payment system efficiency and security in the long run, but they often introduce new, unanticipated risks."
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NZD/USD forecast for the week of June 29, 2015
The NZD/USD pair fell during the course of the week, touching the 0.68 handle. We believe that this market is broken down, and that the move below the 0.70 level was in fact pretty significant. With that, we are sellers below the bottom of the range as we believe the market then heads to the 0.65 handle which is the next large, round, psychologically significant number. Rallies continue to offer value in the US dollar, and as a result we would be sellers upon those rallies. We have no interest in buying this pair at the moment
source
The NZDUSD just keeps breaking round number levels to the downside. It has now reached the 0.6700 level and the downtrend is still in place.
New Zealand Maintains 'AA' Rating With Positive Outlook: Fitch
International ratings agency has affirmed New Zealand's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'AA' and 'AA+' respectively and added that the country's general government deficit continues to narrow, albeit at a slower pace than previously projected.
"Weak inflationary pressures have reined in nominal growth, reducing the pace of consolidation as a proportion of GDP growth," Fitch said in an accompanying statement.
The report noted that New Zealand's general government (central and local government) debt to GDP ratio was 35.7% in 2014, similar to the 'AA' median, but well below the OECD median of 71.8%. Under the ratings agency's baseline scenario, the government debt ratio will fall from 2017 onwards.
"New Zealand's status as a high-grade sovereign credit is underpinned by a credible and flexible economic policy framework, supportive business environment and high standards of governance," according to the statement.
A longstanding weakness to the sovereign credit profile are external finances that are made more vulnerable by dependence on agricultural commodities and exposures to China, both directly and indirectly through economic and financial linkages with Australia, the report also added.
"Fitch expects the current account deficit to widen to 5.4% of GDP in 2016 from 3.3% in 2014 as growth in investment, spurred by construction activity, outpaces domestic savings."
The agency also warned of a gradual build-up of external indebtedness that could increase longer-term vulnerabilities and sensitivity to external shocks.
It expects the New Zealand economy to expand 2.8% in 2015 as lower agricultural production due to drought, and weaker demand following a fall in dairy prices, has slowed New Zealand's economic momentum.
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The Kiwi retraces to the 0.6700 level, but the level seems to be acting now as resistance.
New Zealand ANZ Truckometer for June: +1.6% m/m (prior was -1.0%)
The ANZ Truckometer is a measure of economic activity using real-time traffic data from around New ZealandHeavy index is +1.6% m/m
Key points from ANZ (bolding is mine):
NZD/USD: US Dollar Profits as Fundamentals Surpass Feelings
The kiwi was seen moderately lower against the US dollar on Monday, moving a step closer to its five-year bottom at $0.6621 seen July 7. The greenback had already shown some strength in the morning, once the first news of a Greek deal hit the forex markets, despite the amount of additional work ahead.
"The deal represents a removal of a potential restraint on Fed tightening plans, so there is a dollar positive aspect to it," Altana Hard Currency Fund portfolio manager Ian Gunner noticed. "The big twin uncertainties over the past few months have been Greece and Fed tightening."
The NZD/USD declined 0.42% to trade at $0.6687, falling from an intraday high at $0.6752 reached during the Asian market hours, while the US dollar index jumped 0.81% to 96.76 points.
Therefore, investors shifted attention from geopolitical issues to macro fundamentals, while digesting Federal Reserve (Fed) Chair Janet Yellen's speech heard last Friday. Yellen stuck to the Fed's official program seen in the latest minutes, as she acknowledged a possible increase of the rates in 2015, while warning against premature action.
"Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy," Yellen said in prepared remarks. "I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step."
Looking ahead, the reports on retail sales, consumer confidence and factory data will dominate the US trading sessions, while investors awaited the fresh release of the US monthly budget statement later in the afternoon. Analysts estimate a surplus of $50 billion for the month of June, after the $82.4 billion deficit booked previously.
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