NZD/USD – Kiwi Choppy on New Zealand Employment, Commodity Price Reports

The New Zealand dollar has posted slight gains on Monday, as NZD/USD is trading just above the 0.65 line in the North American session. In economic news, US Core PCE Price Index came in at 0.0%, while Personal Spending posted an identical reading. In the US, ISM Manufacturing PMI dipped to 48.2 points, short of the estimate. Over in New Zealand, there are three key economic events on the schedule – GDT Price Index, Employment Change and Unemployment Rate. As well RBNZ Governor Graeme Wheeler will speak at an event in Christchurch.

The markets are keeping a close watch on key New Zealand releases on Monday, so we could see some volatility from NZD/USD later in the North American session. Last week, there were no surprises from the RBNZ, which maintained interest rates at 2.50%. There was some positive news from Trade Balance, as the deficit narrowed to $NZ 53 million, compared to $NZ 779 million a month earlier. This strong figure beat the estimate of $NZ 130 million.

With the Federal Reserve staying on the sidelines last month and not raising rates, market speculation has now shifted to the March meeting. Will we see another rate at that time? The Fed probably cannot answer this question just yet, so the markets will have to show some patience.  The inflation picture remains problematic, with the Fed saying that inflation levels will remain low, and may not reach the target of 2.0% until 2018. Given these Fed’s continuing concerns about a lack of inflation, it’s hard to foresee another rate hike in March absent a strong improvement in key US indicators. The manufacturing sector is another weak spot in the US economy, and this was underscored last week, as the December reports for durables were dismal. Durable Goods dropped 1.2%, while Core Durables plunged 5.1%, its weakest showing since August 2014. These poor numbers underscore ongoing weakness in the US manufacturing sector, which has not improved despite positive economic conditions. There was more disappointing news on the housing front last week, as Pending Home Sales posted a negligible gain of 0.1%, well off the estimate of 1.0%.

NZD/USD Fundamentals

Monday (Feb. 1)

• 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.0%
• 8:30 US Personal Spending. Estimate 0.1%. Actual 0.0%
• 8:30 US Personal Income. Estimate 0.2%. Actual 0.3%
• 9:45 US Final Manufacturing PMI. Estimate 52.7 points. Actual 52.4 points
• 10:00 US ISM Manufacturing PMI. Estimate 48.6 points. Actual 48.2 points
• 10:00 US Construction Spending. Estimate 0.1%. Actual 0.6%.
• 10:00 ISM Manufacturing Prices. Estimate 34.7 points. Actual 33.5 points
• Tentative – US Loan Officer Survey
• Tentative – New Zealand GDT Price Index
• 16:45 New Zealand Employment Change. Estimate 0.8%
• 16:45 New Zealand Unemployment Rate. Estimate 6.1%
• 18:45 New Zealand Labor Cost Index. Estimate 0.5%
• 18:45 RBNZ Governor Graeme Wheeler Speaks

*Key releases are highlighted in bold

*All release times are EST

NZD/USD for Monday, February 1, 2016

NZD/USD February 1 at 10:30 EST

Open: 0.6471 Low: 0.6446 High: 0.6508 Close: 0.6506

NZD/USD Technical

• NZD/USD was uneventful in the Asian and European sessions. The pair has posted gains in North American trade
• There is resistance at 0.6605
• 0.6449 is providing support

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, long positions still maintain a slight majority (53%), which is indicative of trader bias towards the pair continuing to push higher.

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.