NZD/USD – Kiwi Steady, Markets Eye New Zealand GDT Price Index

The New Zealand dollar has posted slight gains on Tuesday, as NZD/USD is trading at 0.6440 in the North American session. In economic news, it’s a quiet day in the US, with two minor releases. New Zealand will release the GDT Price Index, a key event which could affect the movement of NZD/USD. We’ll get a look at key US numbers on Wednesday, with the release of CPI and Building Permits.

It’s been a January to forget for the New Zealand dollar, which  has plunged close to 400 points in less than three weeks. The kiwi joins other minor currencies, such as the Australian and Canadian dollars, which have experienced similar sharp drops in early 2016. Events in China precipitated the kiwi’s woes, as the Chinese stock market meltdown and devaluation of the Chinese yuan spooked the markets. The bad news continued this week, as Chinese GDP for the fourth quarter showed another drop, dipping to 6.8%, shy of the forecast of 6.9%. Chinese GDP for 2015 came in at 6.9%, the weakest gain in 25 years. Tensions throughout the Middle East have also contributed to significant movement away from minor currencies like the New Zealand dollar towards the safe-haven US dollar. With investors demonstrating little appetite for risk, NZD/USD could slide even further.

With the Fed finally pressing the rate trigger in December, the markets are looking for hints of the timing of the next interest rate increase. A rate hike at next week’s policy meeting is not considered likely, coming so soon after the December move. A hike by the Fed in March is more probable, although this is contingent on a strong US economy. Although the economy is in good shape, one major area of concern is the inflation picture. Inflation levels have not kept up with other economic indicators and remain at low levels. Another concern is a lack of wage growth, despite a robust labor market. The Fed will be keeping a close eye on Wednesday’s CPI reports, and it’s a safe bet that policymakers will want to see stronger inflation numbers before signing on for another rate hike.

NZD/USD Fundamentals

Tuesday (Jan. 19)

• Tentative – New Zealand GDT Price Index
• 10:00 US NAHB Housing Market Index. Estimate 61 points. Actual 60 points
• 16:00 US TIC Long-Term Purchases

Wednesday (Jan. 20)

• 8:30 US Building Permits. Estimate 1.20M
• 8:30 US CPI. Estimate 0.0%
• 8:30 US Core CPI. Estimate 0.2%

*Key releases are highlighted in bold

*All release times are EST

NZD/USD for Tuesday, January 19, 2016

NZD/USD January 19 at 10:15 GMT

Open: 0.6450 Low: 0.6414 High: 0.6513 Close: 0.6481

NZD/USD Technical

• NZD/USD posted small gains in the Asian and European sessions. The pair is unchanged early in North American trade
• There is resistance at 0.6605
• 0.6449 remains a weak support level
• Current range: 0.6449 to 0.6605

Further levels in both directions:

• Below: 0.6449, 0.6344, 0.6233 and 0.6152
• Above: 0.6605, 0.6738 and 0.6897

OANDA’s Open Positions Ratio

In the NZD/USD ratio there has been some movement towards long positions. Short positions still retain a majority of positions (55%). This is indicative of trader bias towards the pair moving to lower levels.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.