NZD news - page 9
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New Zealand - Trade Balance for September): $ -1436m (expected -1145m)
New Zealand - Trade Balance for September $ -1436m
Exports, $ 3.47bn
Imports, $ 4.9bn
NZD: Multiple Legs Of Support; A Trend Change Doesn't Look Imminent
Last month we noted the NZD was fully priced and technically susceptible to a pull-back. That’s now occurred, but we’re not yet ready to call time on the kiwi. The medium-term bias for NZD is lower within our forecasts, but a trend change doesn’t look imminent:
-NZ remains a strong contender on our economic scorecard (comparing factors like growth, inflation, interest rates, unemployment, current account and fiscal data)
- NZ stands out on qualitative rankings (eg ease of doing business, the sound microeconomic reform agenda, fiscal discipline)
-The commodity cycle is showing tentative signs of turning
-A ‘muddle through’ world should generally be supportive of the NZD. It’s expensive to short the NZD from a carry perspective, so being long becomes the default position.
-NZ has far more fiscal flexibility than most and upcoming fiscal easing in NZ is likely to be politically motivated rather than driven by a need to stimulate flagging growth, implying a more contained ‘swing’. Fiscal stimulus is also likely to be about delivering more rather than spending more.
-Our recently re-specified structural fair value analysis puts NZD/USD fair value around 0.75. That doesn’t mean a move to 0.75 is pending, but the gravitational pull is higher, not lower.
But it’s not all roses
-NZ growth will slow by the end of next year as natural handbrakes (capacity and credit rationing) take hold.
-The NZ/US cash rate spread will to narrow as the Fed hikes.
-The interest rate convergence/FX divergence theme is being challenged.
-If we move out of a ‘muddle through’ backdrop – either stronger growth or an ugly slowdown – we would expect to see the NZD fall on either less favourable differentials or a spike in risk aversion.
All told, these considerations suggest NZD will remain elevated over the coming months before drifting lower over 2017 and 2018.
ANZ targets NZD/USD at 0.71 by the year-end.
source
NZD/USD Weekly Forecast October 31-November 4
NZD/USD traded within a narrow range throughout the entire week to close out with a marginal 11 point weekly gain. The pair is on track to close the month out with a decline to snap a prior four-month winning streak. The upcoming week stands to be volatile for the pair with a heavy economic calendar. The pair will also be at risk of a technical break as the past week has shown a struggle to recover near the lower bound of an important rising channel.
In the week ahead, the most notable economic release will be the FOMC statement on Wednesday. The Federal Reserve will haven an opportunity to signal a heads up for a December rate hike this week, something markets have become increasingly expecting.
The futures market indicate a 73.9% probability of a December rate hike, indicating little doubt from the markets that the Fed will follow through with a quarter basis point increase in their interest rate at the December meeting. US economic data since the last Fed meeting has given little reason to doubt that the central bank would move ahead in December and markets will be looking to Wednesday’s statement for a removal of the data dependence component.
Out of New Zealand, several important economic releases are scheduled on Tuesday. Quarterly inflation expectations, employment change, the unemployment rate and the latest Global Dairy Trade auction prices will be released. There is some potential for a subdued reaction to New Zealand data as it falls one day ahead of the FOMC statement.
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New Zealand building consents (permits) Sep.: +0.2% m/m (prior -1.0%)
September building permits data from NZ
NZD/USD Consolidates Within a Range
After some initial volatility at the open this week, NZD/USD has dropped into a range. The pair gapped lower at the open but was quick to close the gap. A sharp drop in early Asian trading was short-lived with a range of about 16 points holding in the pair throughout the European trading session.
Friday’s drop in the Dollar failed to trigger a broader rally for the pair as it remains near critical channel support ahead of this week’s Fed meeting. There is some expectation for the central bank to give a heads up on an upcoming rate hike in December that stands to trigger strength in the Dollar, potentially triggering a technical break in the currency pair.
NZD/USD is on track to close the month out posting a decline to snap a four-month winning streak. At current levels, the pair has served to erase losses from the prior three candles, to set a bearish tone.
Tuesday can see volatility in the pair as there is high impacting data scheduled out of New Zealand. The unemployment rate will be reported shortly after the North American close and is expected to remain unchanged at 5.1%. Simultaneously released will be quarterly unemployment change figures with analysts expecting a rise of 0.6% against a 2.4% gain in the prior quarter. Quarterly inflation expectations will be due later in the day with a prior reading of 1.7%.
Out of the United States today, core personal consumption expenditure was reported to increase 1.7% in the year to September, in line with expectation. For the month, the figure registered a 0.2% gain. The Chicago purchasing managers index was reported below expectations at 50.6 in October, the Dallas Fed manufacturing business index was reported to decline 1.5%.
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New Zealand employment data (Q3): Unemployment rate 4.9% (5.1% expected)
NZ third quarter employment data
Reuters RBNZ poll - 30 of 33 surveyed see RBNZ cutting cash rate next week
The latest Reuters poll on the Reserve Bank of New Zealand :
NZD/USD forecast for the week of November 7, 2016
The NZD/USD pair rallied this week, as we have broken above the top of a shooting star from a couple of weeks ago. However, I see quite a bit of resistance all the way to the 0.75 level. Because of this, we could get a short-term pullback but the uptrend channel that I have marked on the chart has held true for quite some time. Because of this, I have to believe that we will more than likely continue to see buyers head into this market. I have no interest in selling until we break down below the 0.70 level.
NZD/USD forecast for the week of November 7, 2016
The NZD/USD pair rallied this week, as we have broken above the top of a shooting star from a couple of weeks ago. However, I see quite a bit of resistance all the way to the 0.75 level. Because of this, we could get a short-term pullback but the uptrend channel that I have marked on the chart has held true for quite some time. Because of this, I have to believe that we will more than likely continue to see buyers head into this market. I have no interest in selling until we break down below the 0.70 level.
New Zealand Dollar Eyes 5-Week Best
The Pound New Zealand Dollar (GBP NZD) exchange rate plummeted to a new all-time low earlier this week as an anaemic Sterling was battered by surging prices at the NZ dairy auction
Sterling was able to recover towards the end of the week following the news that the British High Court had ruled that the UK government would not be able to trigger Article 50 of the Lisbon Treaty without a vote from parliament.
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