Nzdusd - page 15
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NZD/USD: Adamant Kiwi Rallies 2nd Day, Defies Circumstances
The New Zealand dollar climbed for a second day on Thursday, in defiance of words from New Zealand Prime Minister John Key who said he expects the currency to come down, with any further upside limited following Wednesday's FOMC minutes, which produced surprises and left the door open for a June rate hike.
The kiwi was trading up 0.33% at $0.7573, rising for a second day from below the $0.75 handle, where it opened on Wednesday.
"NZD/USD snapped through 0.7550 after some initial resistance, suggesting the ascent to 0.7600 was technically driven (by stop-loss buying) rather than by fundamental interest. We continue to believe that selling at 0.7600 with a medium-term outlook remains an attractive strategy," Raiko Shareef, a currency strategist at BNZ Markets said in a note on Thursday.
John Key said on Thursday that he expects the local currency to decline further against the US dollar once US monetary policy is normalized.
Although the NZ dollar dipped to a four-year low below $0.72 in March, it still remains "unjustifiably" and "unsustainably" high, given the current economic settings, according to Reserve Bank of New Zealand Governor Graeme Wheeler.
Moreover, since then the kiwi has managed to pocket another 5% versus the greenback, with some support stemming from the dovish FOMC minutes on March 18, which muted bullish bets on the US dollar back in March.
Shortly after the FOMC statement was released, Statistics New Zealand reported fourth-quarter economic growth figures for New Zealand, which came in largely as expected, offering an additional boost to the currency pair.
Still, further upside momentum is limited thanks to Wednesday's details from the FOMC minutes, which showed "several" Fed officials thought the first increase in the federal funds rate should come in June.
The New York Fed president William Dudley said that he could "imagine circumstances where a June rate hike could still be in play" if the data rebound in the next two months. However, he remained cautious, adding that if the economy grew at a slower pace it would be reasonable to expect postponed action from the Fed.
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Another bounce to the downside from the 0.7600 level on the NZDUSD. The level has proven to be a good resistance area, but the more times it visits that zone, the higher the probabilities of a breakout. Next support level could be the 0,7500 level.
NZD/USD: Kiwi Gives Up, Drops Further From $0.76
The kiwi tested the strong resistance of $0.7610 on Friday and this barrier has held for the last couple of days as bulls repeatedly hit the wall, only to find themselves unable to breach it. Ahead of the US session, the pair was trading at $0.750, mildly lower on the day.
The US dollar traded higher against major peers, excluding yen, and the EUR/USD pair dropped closer to the cycle low of $1.05, limiting gains for commodity currencies.
Moreover, the greenback strengthened after the FOMC minutes showed that the central bank was still on track to raise rates this year, though maybe not in June, as was previously expected. However, September's rate hike comes into play, which is in no way priced in the market, according to interest rates derivatives and this might provide further support for the greenback in the coming weeks.
Speeches from Fed officials Lacker and Kocherlakota are due later in the session, with Lacker being a supporter of an earlier rate hike, while Kocherlakota is a clear dove and prefers the monetary policy to stay loose.
"The move in the USD over the last 24hrs has been firmly supported by rising US front-end yields in response to the message from Wednesday’s FOMC minutes. In addition, yesterday’s strong weekly jobless claims data release underscores the health of the labour market despite last week’s soft employment report. We think the adjustment higher in US front-end rates has further to go in order for the market to price back in a Fed rate hike," analysts at BNP Paribas wrote in a research note on Friday.
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NZD/USD weekly outlook: April 13 - 17
The New Zealand dollar declined against its U.S. counterpart on Friday, as traders continued to mull the timing of a Federal Reserve rate hike.
NZD/USD shed 0.34% on Friday to settle at 0.7540 by late trade. For the week, the pair lost 0.99%.
Demand for the dollar was underpinned by expectations for higher interest rates, as investors regained confidence that the U.S. economy would continue to recover after recent economic reports pointed to a slowdown at the start of the year.
The greenback received a boost earlier in the week after comments by the presidents of the New York and Richmond Federal Reserve banks made the case for the Fed to begin policy tightening as early as the summer.
Some investors had pushed back the timing of a rate hike until late 2015 after a surprisingly weak U.S. employment report for March.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.38% to 99.63 late Friday. The index gained 2.89% for the week.
In the week ahead, markets will be looking ahead to Tuesday’s report on U.S. retail sales, as well as Friday’s reports on inflation and consumer sentiment, for further indications on the strength of the economy.
Traders are also looking ahead to a raft of Chinese economic data in the week ahead, including reports on first quarter gross domestic product, as well as data on industrial production and the trade balance.
The Asian nation is New Zealand's second largest trade partner.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
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China's weak exports data has hurt the Kiwi, due to the close trade ties that New Zealand and China have.
Preview of the New Zealand CPI for Q1 coming up Monday morning NZ time
The results are expected, then, to fall well below the Reserve Bank of New Zealand target band for inflation of 1 - 3%.
On the other hand, the expected fall is not quite as much as the Q1 fall of 0.4% RBNZ forecast in its March Monetary Policy Statement (which would leave the annual rate at 0%).
The New Zealand CPI is being weighed on by lower commodity prices as well as a still high exchange rate (despite the falls) and low wage growth.
Analyst comments on whats expected:Note ... although the CPI data on Monday is going to be a focus, what may be even more important later in the week is a speech from RBNZ Assistant Governor John McDermott. He is speaking to the Waikato Chamber of Commerce and Industry about inflation on Thursday (April 23) at 1230pm local time (0030GMT on April 23). He will likely provide more clarity on the central bank's outlook for inflation and perhaps what it may mean for monetary policy.
source
Low Petrol Prices Heat up Rate-Cut Talk as RBNZ Target Missed Again
The change in consumer prices was negative for the second time in a row last quarter, increasing the likelihood that the central bank will lower the Official Cash Rate (OCR) this year.
The CPI fell 0.3% in the March quarter, Statistics New Zealand reported on Monday, coming in slightly weaker than the market forecast of a 0.2% decline. This was the second time in a row that the CPI had fallen on a quarterly basis, which has not happened since the December 1998 and March 1999 quarters.
This was largely due to a 11% slide in petrol prices over the quarter. Without the change in fuel prices, the CPI would have risen 0.3% in the March quarter, according to the statistics office.
Tradables prices plunged 2.2% in the March quarter, suggesting the still-high exchange rate weighed down prices of imported goods, while the non-tradables CPI rose 1.1% over the last quarter, partly reflecting a 11% hike in the cigarette and tobacco exercise duty.
The annual change in the CPI slowed from 0.8% in the December quarter to 0.1% last quarter, which was the smallest annual increase since the September-1999 quarter, and marked the second quarter in a row that inflation had fallen below the Reserve Bank of New Zealand's (RBNZ) 1-3% target band.
In March when the RBNZ released its latest Monetary Policy Statement, they had forecast that the year-on-year change in prices would be nil last quarter, and would remain below their target for most of the year. Despite this, they projected no change in the OCR throughout the forecast period, which extended to the March-2017 quarter.
According to the statement, the next change in the OCR, either up or down, will depend on the emerging flow of economic data. Today's data will likely fuel expectations of a rate cut, however economists are split over whether or not weak inflation will eventually lead the RBNZ to cut interest rates.
Investment bank Morgan Stanley said last week that the RBNZ will trim rates later this year due to weak inflation, and as fellow central banks ease policy. Meanwhile, Westpac bank have forecast no change in the OCR this year.
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The 200 Day EMA on the NZDUSD has proven to be a good resistance around the 0.7739 level. Lets see if the pair breaks that resistance during this week.
NZD/USD Forecast Apr. 27 – May 1
The New Zealand dollar reached for the sky but met the RBNZ there, and couldn’t maintain the gains. It now faces a bigger test from the Bank: the rate decision. Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
Inflation in New Zealand is lower than expected: a drop of 0.3% in quarterly prices in Q1 2015. This was due to oil prices but slightly worse than predicted. Yet the bigger blow came from the central bank: the regular complaint about the exchange rate was accompanied by a statement saying the rates will not rise anytime soon. This hurt the kiwi. In the US, data is beginning to look better with existing home sales on the rise but other data was weak and the dollar struggled.
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Quick look at the RBNZ meeting on April 30 from Barclays
Barclays with a quick look at what to expect from the RBNZ meeting on April 30:
(this is curious given the speech from RBNZ assistant Governor McDermott last week which a lot of analysts have read as indicating the bank may switch to an easing bias)