Nzdusd - page 21
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The bearish trend stays in place for the NZDUSD, but it is kind of consolidating around the 0.6700 level.
NZD: RBNZ To Cut This Month And Again Before Year-End - Nomura
Nomura now expects the RBNZ to cut rates by 25bp at the July meeting and again before the end of the year, bringing the policy rate to 2.75% by year-end.
"However, the outlook for the policy rate is heavily dependent on developments in the terms of trade and a further deterioration could lead rate cuts as early as at the September meeting. Despite the sharp depreciation in NZD in recent months, we estimate that the NZD TWI is still about 7% overvalued. This means that a further currency depreciation should be expected in the near future to re-equilibrate the currency," Nomura argues.
"Moreover, with the terms of trade likely to continue to fall, albeit at a slower pace, in coming months and the expectation that the RBNZ will need to cut rates further while the US Federal Reserve could hike rates before the end of the year, a further depreciation should be expected," Nomura adds.
"However, with the market already extremely short NZD, the depreciation could be slow or even stall in the short-term. This could allow for some decline in AUD/NZD, since the market has not fully priced in a rate cut by the RBA by the end-of the year and very weak growth in Australia in Q2. On a longer perspective, short NZD/USD or long GBP/NZD continue to make sense, even though the pace of the depreciation is likely to be slower," Nomura advises.
source
NZD/USD: Kiwi Plunges to 6-Yr Low As Monetary Policy Divergence Grows
The New Zealand currency fell to a 6-year low as the monetary policies pursued by the country's central bank and the US Federal Reserve remain on divergent paths.
While in the US the central bank's policymakers are getting ready for the first interest rate hike, their counterparts in New Zealand will likely implement further easing at the upcoming monetary policy meeting, according to many analysts.
"We see the bank taking the OCR from 3.25% today, to 2.50% by the October meeting," Raiko Shareef, from BNZ wrote on Friday.
"We anticipate the RBNZ will deliver both the July and September rate cuts with a prominent easing bias, which will keep NZ rates depressed," Shareef added.
Last month the RBNZ cut the Official Cash Rate (OCR) to 3.25%, its first cut in four years, due to weak inflation and an expected drop in demand.
The latest CPI report showed inflation remains soft, with the respective gauge hitting 0.4% in the June quarter, coming in slightly lower than the 0.5% rate forecast by markets.
Moreover, dairy prices received another blow as Fonterra's fortnightly Global Dairy Trade (GDT) auction showed on Wednesday that the average price of dairy goods tumbled more than 10%, marking the ninth-consecutive decline in the dairy index.
Following the auction results, Federal Reserve's Chair Janet Yellen delivered her semi-annual testimony to the House Financial Services Committee, in Washington. In her speech, Yellen noted that labor market conditions were improving, while inflation remains subdued in the US economy, but that the first interest rate hike was still likely to be this year.
"Despite the soft patch in economic activity in the first quarter, that the labor market has continued to show progress toward our objective of maximum employment. Inflation has continued to run below our longer-run objective, but we believe transitory factors have played a major role," Yellen said.
San Francisco Fed President John Williams also raised his voice in favor of an interest rate hike later this year during his speech to the Mesa Chamber of Commerce delivered on Wednesday.
As a result, the NZD/USD pair tumbled 1.74% and fell from above the $0.67 handle and slid below the $0.66 threshold on Thursday morning in Wellington.
Over the week, the New Zealand dollar lost 3.1% to close the week at $0.6513 vs US dollar.
source
Amazing drop on the Kiwi and the downtrend may continue further.
RBNZ cuts rates by 25 basis points
A 25 bp cut was widely expected
From 3.25% to 3%
More:
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Note - NZD higher .... as I said earlier "this is a widely expected and positioned for cut."
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Statement by Reserve Bank Governor Graeme Wheeler:
The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 3.0 percent.
Global economic growth remains moderate, with only a gradual pickup in activity forecast. Recent developments in China and Europe led to heightened uncertainty and increased financial market volatility. Particular uncertainty remains around the impact of the expected tightening in US monetary policy.
New Zealand's economy is currently growing at an annual rate of around 2.5 percent, supported by low interest rates, construction activity, and high net immigration. However, the growth outlook is now softer than at the time of the June Statement. Rebuild activity in Canterbury appears to have peaked, and the world price for New Zealand's dairy exports has fallen sharply.
Headline inflation is currently below the Bank's 1 to 3 percent target range, due largely to previous strength in the New Zealand dollar and a large decline in world oil prices. Annual CPI inflation is expected to be close to the midpoint of the range in early 2016, due to recent exchange rate depreciation and as the decline in oil prices drops out of the annual figure. A key uncertainty is how quickly the exchange rate pass-through will occur.
House prices in Auckland continue to increase rapidly, but, outside Auckland, house price inflation generally remains low. Increased building activity is underway in the Auckland region, but it will take some time for the imbalances in the housing market to be corrected.
The New Zealand dollar has declined significantly since April and, along with lower interest rates, has led to an easing in monetary conditions. While the currency depreciation will provide support to the export and import competing sectors, further depreciation is necessary given the weakness in export commodity prices.
A reduction in the OCR is warranted by the softening in the economic outlook and low inflation. At this point, some further easing seems likely.
source
RBNZ cuts rates - NZD jumps? No logic in this market any more
New Zealand June Trade Balance: -60m (vs. 100m expected)
NZ June trade balanceTrade balance, -60 m .......... deficit instead of the expected surplus ... the first deficit for a June month since 2009
Exports, 4.23 bn, better than expected
Imports, 4.29 bn
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Summary (of the StatsNZ release)
Goods exports to China rose $20 million from June 2014
"When we compare the same months a year apart, this is the first monthly increase in exports to China since August 2014," international statistics manager Jason Attewell said. "However, whole milk powder to China continued its recent falls, and was down $92 million."
Between September 2014 and May 2015, exports to China fell an average of $373 million a month when compared with the same month in the previous year. Exports to Australia, our largest export partner (annually), fell an average of $43 million a month over that time.
Overall goods exports rose 1.3 percent ($56 million) in June 2015, despite milk powder, butter, and cheese exports being down $320 million. Logs (up $112 million), meat (up $89 million), and fruit (up $87 million) led the rise.
Monthly imports rose 9.0 percent ($355 million) compared with June 2014. This was despite the import of large aircraft in June last year and no similar imports this June. The rise was across a range of commodities, including consumption goods from China (such as clothing) and machinery and plant from China (such as mobile phones).
The annual trade deficit increased from May, to $2.8 billion in June
Seasonally adjusted quarterly goods exports rose 0.4 percent ($49 million) from the March 2015 quarter, to $12.2 billion in the June 2015 quarter. Fruit exports rose, while milk powder, butter, and cheese fell. Quarterly goods imports also rose 0.4 percent ($45 million), to $12.6 billion. Capital goods imports rose while intermediate and consumption goods fell.
The seasonally adjusted quarterly trade deficit was $460 million. This is the fifth consecutive quarterly trade deficit. The last surplus was in the March 2014 quarter.
source
The Kiwi tries to correct temporarily versus the Dollar, but the bearish trend is still in place.
The correction is very similar to EURUSD correction - same drivers?
NZD/USD weekly outlook: August 3 - 7
The New Zealand dollar fell to a two-week low against its U.S. counterpart on Friday, amid growing expectations the Federal Reserve will raise interest rates later this year.
NZD/USD hit 0.6535 on Friday, the pair's weakest level since July 20, before subsequently consolidating at 0.6591 by close of trade, down 0.2% for the day.
On the week, the pair inched up 0.23%, but declined 2.53% for the month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 97.32 late Friday, paring the week’s gains to 0.1%.
The dollar index rose 1.86% in July, boosted by expectations that the Federal Reserve could raise rates as soon as September if the economy continues to improve as expected.
The central bank sounded more upbeat about the economy following its policy meeting last week, leaving the door open for an interest-rate hike as soon as September.
In its rate statement published Wednesday, the Fed described the economy as expanding "moderately," while upgrading its view of the labor and housing markets.
The Fed gave no clear indication of the timing of the next rate hike, but left itself room to act as early as September, citing "solid" gains in the job market and "additional" improvement in the housing sector.
The Commerce Department said on Thursday that the economy grew 2.3% in the second quarter, missing expectations for growth of 2.6%, but improving from growth of 0.6% in the preceding quarter.
Meanwhile, in New Zealand, data on Friday showed that the ANZ Business Confidence Index fell to minus 15.3 in July from minus 2.3 the previous month.
The kiwi was also pressured by plunging commodity prices and steep declines on China's stock market last week.
In the week ahead, investors will be focusing on Friday's nonfarm payrolls report for July, for fresh indications on the strength of the economy and the timing of a U.S. rate increase.
Market players will also be focusing on New Zealand employment data due on Wednesday.
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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