New Zealand dollar under pressure, NZ manufacturing report next

The New Zealand dollar continues to lose ground, with NZD/USD declining 1.56% this week. In Thursday’s North American trade, NZD/USD is trading at 0.6563, down 0.17% on the day. On the release front, U.S. unemployment claims was unexpectedly high, climbing to 222 thousand. This was the highest reading in five weeks. Later in the day, New Zealand releases the Business NZ Manufacturing Index. On Friday, the U.S. releases retail sales and consumer confidence reports.

In the U.S., consumer inflation remained soft in May. CPI slowed to 0.1%, down from 0.3% in the previous release. This matched the estimate. The core reading posted a gain of 0.1% for a fourth straight month, shy of the forecast of 0.2%. With the May inflation numbers remaining low, there could be more pressure on the Fed to lower interest rates in order to boost economic activity and inflation. The likelihood of further rates this year is increasing – the CME Group has set the odds of a July cut at 66% and another cut in September at 50%. Lower interest rates make the U.S. dollar less attractive to investors, so investors will be keeping an eye on alternative assets.

China is New Zealand’s largest trade partner, so it’s no surprise that the slowdown in the Chinese economy has hurt the export-reliant New Zealand economy. There are further signs that the Chinese economy is feeling the effects of the trade war with the U.S. Chinese consumer inflation rose at an annualized rate of 2.7% in May, matching the forecast. However, producer price inflation slowed to 0.6% in May, down from 0.9% in April. As well, Chinese auto sales plunged 16.4% in May, its worst monthly decline on record. This marked an 11th successive decline and comes after a 14.6% drop in April. The soft numbers are reflective of the slowdown which has gripped the Chinese economy, and investors remain concerned, as the trade war with the U.S. shows no signs of easing.

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NZD/USD Fundamentals

Thursday (June 13)

• 8:30 US Import Prices. Estimate -0.3%. Actual -0.3%
  
• 8:30 US Unemployment Claims. Estimate 215K. Actual 222K
  
• 10:30 US Natural Gas Storage
• 13:01 US 30-year Bond Auction
• 18:30 New Zealand Business NZ Manufacturing Index

Friday (June 14)

• 8:30 US Core Retail Sales. Estimate 0.5%
• 8:30 US Retail Sales. Estimate 0.7%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.1

*All release times are DST

*Key events are in bold

NZD/USD for Thursday, June 13, 2019

NZD/USD June 13 at 10:40 DST

Open: 0.6574 Low: 0.6588 High: 0.6558 Close: 0.6561

NZD/USD Technical

In the Asian session, NZD/USD edged higher but then gave up these gains. The pair has posted slight losses in European trade and ticked lower early in the North American session.

• 0.6539 is a weak support level
• 0.6607 is the resistance 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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