NZD news - page 15
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New Zealand - Services PMI for December: 58.4 (prior 57.9)
NZD/USD Recovery Nearing Declining Trendline Resistance
NZD/USD extended higher on Tuesday, in a recovery that has been taking place over the past month. The pair is approaching resistance and near-term price action is likely to clarify trends for the currency pair.
The turn lower in NZD/USD in September eventually led to several technical developments that supported a bearish outlook for the currency pair. However, the recovery that has been taken place since late December has carried strong momentum behind it, questioning if the downtrend remains intact. The pair made an important technical development today by breaking above the December high. While the breach may have just been to trigger liquidity, resistance from the December high at 0.7238 carries importance.
The 0.7238 level marks the high set during the December Fed meeting, where the central bank announced its intentions to raise rates three times in 2017, following prior communication that pointed to two rate hikes. While the price action following the December central bank meeting carried strong downside momentum behind it, the rally today has served to fully erase the decline inspired by the Federal Reserve.
There inevitably would have been stop loss orders building above 0.7238 and with further resistance in close proximity, there is some potential for a turn following the elimination of weak positioning. The declining trendline connects the September high with the November high and is a likely technical area where sellers will be waiting.
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New Zealand - Credit Card Spending for December: +8.5% y/y (previous was +4.1% y/y)
New Zealand Q4 CPI: 0.4 % q/q (expected 0.3%) & 1.3% y/y (exp. 1.2%) CORRECT
Inflation data from NZ for the December quarter of 2016
NZD/USD Erases Early Day Gains From CPI report
A stronger consumer price index reading in New Zealand failed to keep the Kiwi Dollar bid, despite inflation returning to the lower band of the target range. NZD/USD briefly traded at the highest level since November 10th but a steady decline following the report has served to erase early day gains as well as the prior day’s gain.
The consumer price index was reported to gain 0.4% in the fourth quarter to beat the analyst estimate for a gain of 0.3%. The annual figure rose to 1.3% versus the consensus of 1.2% and following a previous reading of 0.4%. The RBNZ had communicated early in the fourth quarter an expectation for inflation to return to the lower bound of the target range as oil prices and housing were expected to cause upward pressure on prices.
The Reserve Bank of New Zealand has finished a well communicated easing cycle at their last meeting in November. Today’s CPI data will reaffirm that there won’t be a need for further easing and that a potential tightening cycle may be on the horizon. The RBNZ had been battling with low inflation for quite some time and during some meetings admitted that they did not exactly understand why inflation levels were as low as they were. With the quarterly consumer price index number rising back towards the target range, the next few readings will be important as continued price pressure may have the central bank looking to return the interest rates back to levels seen in early 2016.
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NZD/USD forecast for the week of January 30, 2017
The NZD/USD pair rallied during the week, testing the 0.7350 region. We pulled back a bit though, and it looks as if the previous uptrend line will continue to be resistive. Alternately, if we can get above the 0.7350 level, I feel that the market will break out to the upside in go much further. If we can break down below the bottom of the weekly candle, then I think the market falls apart. This week and perhaps the next one should be vital in determining the longer-term direction.
NZD: 5% Overvalued Vs USD, Between 5% to 10% Overvalued Vs AUD
The New Zealand dollar stands out alongside the US dollar as one of the most overvalued G10 currencies according to our long-term model framework.
We estimate that it is currently around 5% overvalued relative to the US dollar, and between 5% and 10% overvalued against the Australian dollar.
It supports our outlook that there is limited further upside for the kiwi against the US dollar, and that it is likely to underperform against the Aussie in the year ahead. We are forecasting that the AUD/NZD rate will move back towards the 1.1000-level
However, the comments overnight from New Zealand Finance Minister Joyce signalled that he is not overly concerned by the strength of the kiwi. He stated that “we’re coping very well by historical standards with a dollar that’s now been historically high for a significant period of time”. His view is that the kiwi will fundamentally operate at these levels until the US dollar strengthens on the back of Fed rate hikes, and the market could become more concerned over New Zealand’s current account deficit which is currently not a concern.
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New Zealand - M3 Money Supply (December) +6.4% y/y (prior 5.9%)
Earlier NZ data today, migration for December
New Zealand - Q4 employment data. Unemployment rate for Q4: 5.2% (expected 4.8%)
Jobs report for the October to December quarter 2016 from NZ
New Zealand Employment Increases 0.8% in Q4; Unemployment Jumps to 5.2%
New Zealand employers added workers at a steady pace in the fourth quarter as more people entered the labor market, which drop the unemployment rate higher.
Overall employment rose 0.8% in the October-December period, matching forecasts, the federal statistics agency reported Wednesday. That was the fifth consecutive quarterly advance.
Joblessness rose to 5.2% on the quarter from 4.9%, as more people entered the workforce. A median estimate of economists forecast the unemployment rate to decline to 4.8%.
Workforce participation strengthened to 70.5% from 70.1%, official data showed.
Unemployment steadily declined throughout the year, pointing to a healthy overall economy. A recent forecast from HSBC Bank tipped New a Zealand as the strongest emerging market economy of 2017. Analysts at the bank said they expect New Zealand’s gross domestic product (GDP) to expand around 3% annually for the next few years.
Underpinning the economy’s bright outlook are booming construction and tourism industries and net inflows of migrants, which are also boosting consumption and demand.
Visitors to New a Zealand spiked 11.1% in the 12 months through December, government data showed earlier this week. That followed an 11% year-over-year advance the previous month.
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