NZD/USD – Kiwi Lower as NZ Dairy Price Index Slides

NZD/USD has lost about 80 points on Tuesday, as the pair trades at 0.6780 in the North American session. In economic news, the New Zealand GDT Price Index plunged 7.4%. Over in the US, there was disappointing news as well, as Factory Orders and IBD/TIPP Economic Optimism both missed their estimates.

The New Zealand GDT Price Index, which measures dairy prices at auction, looked dismal in the first November reading (the indicator is released twice each month),posting a sharp decline of 7.9%. This marked the indicator’s worst showing in six months. The markets won’t have much time to dwell on this poor reading, as New Zealand releases key employment numbers later on Tuesday. Employment Change is expected to remain steady ,with an estimate of 0.4%. The unemployment rate has moved higher over three consecutive readings, rising to  5.9% in the second quarter. The downward trend is expected to continue, with a forecast of 6.0% for Q3. If either of these employment releases miss expectations, the New Zealand dollar could continue to lose ground.

Last week, the Federal Reserve caught the markets off guard with a hawkish policy statement. The Fed stated that a rate hike was a possibility in December, depending on the strength of employment and inflation numbers. The markets had essentially written off a move by the Fed before 2016, so the statement caused sharp volatility in the currency markets, with the US dollar showing broad gains after the dust had settled. The next Fed meeting is mid-December, and the markets will be in alert mode for any further hints about a rate hike. As well, upcoming key US numbers will be closely monitored, especially employment and inflation data, as the strength of these numbers will play a critical role in determining whether the Fed presses the rate trigger in December. Still, traders should keep in mind that the markets sometimes overreact to Fed statements or comments from Fed policymakers, and the central bank could easily continue to wait on the sidelines until 2016.

With the Federal Reserve statement behind us, the markets are once again focused on economic releases. There was much anticipation ahead of the US Advance GDP for the third quarter, which was released on Thursday. As it turned out, this key event didn’t shake up the markets, as the reading of a 1.5% gain was almost identical to the forecast of 1.6%. Still, this figure was much lower than the Q2 Final GDP of 3.9%, pointing to a slowdown in the US economy. Meanwhile, Unemployment Claims beat the estimate for a fourth straight week, coming in at 260 thousand. The estimate stood at 264 thousand. Will the upcoming Nonfarm Payrolls also beat the forecast? On Friday, US key releases wound up the week on a positive note. Employment Cost Index jumped 0.6%, pointing to an increase in wages for US workers. The UoM Consumer Sentiment, an important gauge of consumer confidence, improved to 90.0 points, within expectations.

NZD/USD Fundamentals

Tuesday (Nov. 3)

• 00:00 New Zealand ANZ Commodity Prices. Estimate 6.9%.
• 13:41 New Zealand GDT Price Index. Estimate -7.4%.
• 15:00 US Factory Orders. Estimate -0.8%. Actual -1.0%
• 15:00 US IBD/TIPP Economic Optimism. Estimate 47.5 points. Actual 45.5 points
• All Day – US Total Vehicle Sales. Estimate 17.8M
• 21:45 New Zealand Employment Change. Estimate 0.4%
• 21:45 New Zealand Unemployment Rate. Estimate 6.0%
• 21:45 New Zealand Labor Cost Index. Estimate 0.5%

Upcoming Key Events

Wednesday (Nov. 4)

• 13:15 US ADP Nonfarm Employment Change. Estimate 183K
• 13:30 US Trade Balance. Estimate -42.7B
• 15:00 Federal Reserve Chair Janet Yellen Testifies
• 15:00 US ISM Non-Manufacturing PMI. Estimate 56.6 points
  

NZD/USD for Tuesday, November 3, 2015

NZD/USD November 3 at 16:45 GMT

NZD/USD 0.6678 H: 0.6779 L: 0.6651

NZD/USD Technical

• NZD/USD posted slight gains in the Asian session, but surrendered these gains and lost more ground in the European session. The pair has been uneventful in the North American session.
• 0.6605 is providing support.
• 0.6738 is a weak resistance line.
• Current range: 0.6605 to 0.6738

Further levels in both directions:

• Below:0.6605, 0.6449 and 0.6368
• Above: 0.6738, 0.6897 and 0.7011

OANDA’s Open Positions Ratio

NZD/USD ratio is close to an even split between long and short positions on Tuesday. This is indicative of a lack of trader bias as to what direction the pair will take next.

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.