NZD/USD – New Zealand dollar continues downturn despite strong manufacturing report

The New Zealand dollar continues to lose ground. In North American trade, NZD/USD is trading at 0.6579, down 0.42% on the day. The kiwi has reversed directions this week, having declined 1.3%. On the release front, New Zealand Manufacturing Sales rebounded in Q1, posting a gain of 1.0%. The indicator had contracted 0.5% in Q4 of 2018. Later in the day, New Zealand releases visitor arrivals. In the U.S., the forecasts for producer price index reports were on the money. PPI dipped 0.1%, down from 0.2% a month earlier. Core PPI edged up 0.2%, up from 0.1% in the previous release. On Wednesday, the U.S. releases consumer inflation reports.

The U.S. dollar was broadly lower last week, and the New Zealand dollar took full advantage, climbing 1.97% last week. This was its strongest weekly gain since mid-November. There were two main reasons why investors moved away from the greenback. First, comments from Federal Reserve president Jerome Powell have set the stage for a rate cut in the coming months. Since raising rates in December, the Fed has been neutral with regard to the direction of the next rate move, but rising trade tensions have raised fears of a slowdown in the U.S. economy. This has prompted the Fed to reconsider a rate cut later this year. The CME Group has projected a 64% likelihood of a 0.25% rate cut, up sharply from a month ago, when the odds of a cut were just 16%. Secondly, there was dismal news on the employment front. Nonfarm payrolls posted its second dismal reading in four months. In May, the economy created only 75 thousand jobs, down from 263 thousand a month earlier. Wage growth was unchanged at 0.2%, shy of the estimate of 0.3%. Still, the U.S. economy remains in good shape, and the greenback has recovered over half of last week’s losses.

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NZD/USD Fundamentals

Monday (June 10)

• 18:45 New Zealand Manufacturing Sales. Actual 1.0%
  

Tuesday (June 11)

• 5:16 US NFIB Small Business Index. Estimate 102.3. Actual 105.0
• 8:30 US Core PPI. Estimate 0.2%. Actual 0.2%
  
• 8:30 US PPI. Estimate 0.1%. Actual 0.1%
• 18:45 New Zealand Visitor Arrivals

*All release times are DST

*Key events are in bold

NZD/USD for Tuesday, June 11, 2019

NZD/USD June 11 at 10:50 DST

Open: 0.6608 Low: 0.6611 High: 0.6569 Close: 0.6579

NZD/USD Technical

NZD/USD posted slighted losses in the Asian and European trade. The pair is flat in the North American session.

• 0.6539 is providing support
• 0.6607 was tested earlier in resistance. It is a weak line
• Current range: 0.6539 to 0.6607

Further levels in both directions:

• Below: 0.6539, 0.6424 and 0.6348
• Above: 0.6607, 0.6699, 0.7055 and 0.7124

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