NZD news - page 6
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NZD/USD: Repeated Failures AT New Highs: Levels & Targets
Trend: Price has maintained a broad uptrend channel bias since mid-2015. July/August has produced a succession of new uptrend highs, each of which has been quickly reversed, the most recent last week at 0.7380. This highlights the significant resistance faced by NZDUSD as it approached the top of its MT uptrend channel, now around 0.7390/10. The uptrend structure remains in play however resistance towards 0.7390/10 should continue to cap the uptrend on a multi-week basis. Uptrend support around 0.6910 sits just below the July lows at 0.6950/60 and should produce a strong band of support below 0.7000. As such, despite the dominant uptrend channel, price appears trapped in an approximate o.70/0.74 range on a multi-week basis.
Momentum: MT momentum now reflects the constraints that we have highlighted on price as it shifts from a positive to neutral bias. ST momentum has shifted to a negative bias without triggering any significant/sustainable negative change. LT momentum continues to reflect the multi-month uptrend.
Outlook: New uptrend highs continue to fail to hold. The weekly candles produced at two of the last three new highs have long upper shadows and confirm that selling pressure upon these spikes remains strong. These repeated failures at new highs are in keeping with a momentum back drop that highlights a mature and failing uptrend. As such we continue to see limitations to the uptrend in the coming weeks. Resistance at 0.7390/0.7410 is most likely to keep price in an approximate 0.7000/0.7400 multi-week range.
NZD/USD at 15-Month High After 7.7% Rise in GDT Auction Prices
Prices in the latest Global Dairy Trade (GDT), the seventh auction of 2016/17, again increased strongly by 7.7% after an increase of 12.7% at the previous auction, while Whole Milk Powder rose a more subdued 3.7% following a 12.9% gain last time. The latest auction result, a third successive robust gain, strengthens the evidence that an important turning point has been seen and could help discourage further Reserve Bank of New Zealand (RBNZ) interest rate cuts.
There has been further tentative evidence that global production is declining under the impact of a sustained price weakness with the EU looking to cut production by 1.1bn litres over the coming months through a voluntary scheme to cut output. Production is also set to decline further in the UK and Australia, while New Zealand production has also been reduced due to the impact of sustained price weakness, which has pushed many farmers out of business.
There is also evidence of rising Chinese demand, which will underpin prices in the short term, and expectations of increased demand from Latin America.
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NZ data: ANZ inflation gauge for August +0.1% m/m (prior -0.3%)
ANZ's measure on inflation in New Zealand
New Zealand - Retail card spending (August): -0.4% m/m (expected +0.3%)
New Zealand - Card spending for August
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NZD/USD forecast for the week of September 12, 2016
The NZD/USD pair initially tried to rally during the course of the week but as you can see the 0.75 level cost enough resistance to turn things back around to form a shooting star. The shooting star of course is very negative, but I believe that there is a lot of noise just below. Because of this, I would be hesitant to sell this market from a longer-term perspective, and as a result I think that you will have to look at this market on shorter-term charts. However, I’m the first to admit that there is a massive amount of support just below, so having said that I still believe that the buyers will prevail.
NZD/USD Bounces From Support Confluence Ahead of Quarterly GDP
NZD/USD caught a bid near 0.7245 support on Tuesday and has managed to recover to the 0.7300 handle in early North American trading on Wednesday. The 0.7245 area reflects a confluence of support for the pair, referencing horizontal support, and a rising trendline from late May lows. The level is also within close proximity of the monthly open for September.
The pair received a boost in its recovery as the US Dollar index (DXY) was seen pulling back after a strong gain on Tuesday. The index posted a high of 95.67 late on Tuesday and was seen falling into a range. Breakout attempts during the first half of the European session failed to sustain a decline, while the EIA oil inventories report may have triggered a break. The initial reaction following the report was a sharp decline to a low of 95.33, while an hourly close below 95.50 can signal a downside range break.
The Kiwi Dollar also received a boost from a recovery in the equity markets. While Asian markets edged down in the Asian session, the S&P 500 has been well supported in early trading, and European equity indices are seen mostly higher. The combination of strength in the equity markets and a lower US Dollar has triggered demand for higher-yielding currencies, resulting in the Kiwi Dollar outperforming all of its counterparts among the majors in early North American trading.
Among the cross rates, GBP/NZD has turned following a four-day recovery and is on track to post a bearish engulfing candle. AUD/NZD continued lower, the pair is on track to post its sixth week of consecutive declines, and is now nearing the 161.8% Fibonacci extension of the recovery from early August lows at 1.0246. NZD/CAD made a sustained break above the neckline of an inverse head and shoulders pattern that dates back to early 2014. The bullish break was made last week, while a succession of higher highs and higher lows was printed today from the August 9 low, indicating a continuation higher.
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NZ data - ANZ Job Ads for August: +3.1% m/m (prior +1.4%)
ANZ Job Ads for New Zealand
NZD/USD forecast for the week of September 19, 2016
The NZD/USD pair fell during the course of the week, breaking the bottom of the shooting star from the previous week that had touched the 0.75 handle. The fact that we have done this, I believe the market is ready to pull back. Pulling back from here makes sense as we have seen quite a bit of bullish pressure. With this being the case though, I think that it’s only matter of time for the buyers return. So having said that I think of this more or less as a sign to step back in wait for support in order to go long yet again. I think it’s going to be choppy, so therefore it’s going to be difficult to deal with from time to time, so therefore you have to look at this market from a very long-term perspective. Because of this, I am much more comfortable buying this market been selling it, and I believe that the “floor” in this market should be the 0.70 level. A break down below there would be a very negative sign and then have me thinking that the New Zealand dollar would breakdown longer term.
At this point in time, sooner or later we will get the right supportive candle to start buying, and therefore I would be willing to jump into this market. If we can break above the 0.75 handle, I think that’s a longer-term buying opportunity as well, perhaps sending the New Zealand dollar towards the 0.80 level. While I don’t necessarily think that the economies around the world are taking off, the New Zealand dollar should still continue to do fairly well if nothing else due to the interest-rate differential between the currencies. Quite a bit of choppiness is coming in my estimation, so having said that some people may be more comfortable trading the short-term charts and simply scalping, but that’s not necessarily my style so I feel that we have to make a decision based upon longer-term charts and simply deal with the nausea that comes.
Westpac New Zealand Consumer Sentiment Index Improves in Q3
Consumer confidence in New Zealand strengthened in the third quarter, according to Westpac’s latest report.
The Westpac consumer confidence index rose to 108.0 in the third quarter, after falling 3.9 points to 106.0 the previous quarter. The quarterly index has been on a general downward trek over the past two years, signaling underlying weakness in the economy.
The Westpac consumer confidence index measures overall optimism in New Zealand’s economy, including personal finances and economic expectations.
The index measuring expected conditions improved markedly in the third quarter, rising to 107.2 from 103.3. The present condition index fell to 109.2 from 110.0 in the second quarter.
RBNZ Holds Rates Steady as Central Bank Deluge Comes to an End
The Reserve Bank of New Zealand (RBNZ) kept monetary policy on hold Thursday, as policymakers indicated that additional easing measures would be required to boost inflation.
The central bank voted to hold the official cash rate at a record low of 2% after August’s 25 basis-point reduction. The decision was in line with economists’ forecasts, which predicted only a one-in-five chance of another rate cut.
“Monetary policy will continue to be accommodative. Our current projections and assumptions indicate that further policy easing will be required to ensure that future inflation settles near the middle of the target range. We will continue to watch closely the emerging economic data,” the RBNZ said in its official statement.
The RBNZ’s next meeting is scheduled for November, where it will be able to assess a new crop of economic data. Officials will be keen on reviewing third quarter inflation figures after consumer price growth became a main policy concern earlier this year. Consumer inflation rose 0.4% annually in the second quarter, prompting the RBNZ to aggressively lower interest rates.
According to analysts, the RBNZ could introduce multiple rate reductions in the near future. For the time being, recovering dairy prices and a strong housing sector are enough to keep policymakers on the sidelines.