NZD/USD – Kiwi Slide Continues, Markets Eye NZ Trade Balance

NZD/USD has posted considerable losses on Wednesday, as the pair trades at the 0.67 line early in the North American session. In economic news, US New Home Sales improved to 512 thousand, matching the forecast. Later in the day, we’ll get a look at the weekly Crude Oil Inventories. New Zealand will release Trade Balance.

It was a busy start to the week in New Zealand. Westpac Consumer Sentiment dipped to 109.6 points in the fourth quarter, down from the previous reading of 110.7 points. Still, this figure points to strong optimism among consumers. Visitor Arrivals slipped by 1.6% and Credit Card Spending posted a strong gain of 7.3% year-on-year, but the February report disappointed with a reading of -0.4%. Wednesday brings Trade Balance, which has been steadily improving. In January, New Zealand posted its first trade surplus in eight months, and the upward trend is expected to continue, with the estimate standing at NZ$75 million.

The US manufacturing sector has struggled, hurt by the global slowdown which has meant less demand for US-produced goods. Recent manufacturing readings have reflected a sector in deep trouble, so the markets were surprised as the Richmond Manufacturing Index surged in March. The indicator, which measures activity in the US Atlantic region, jumped to 22 points, its highest level since June 2010. We’ll get a look at additional manufacturing indicators on Thursday, with the release of US durable good reports.

Will the real Federal Reserve please stand up? Last week’s Federal Reserve policy statement appeared to pour cold water on any imminent rate hikes, but “not so fast”, according to two Federal Reserve officials. On Monday, John Williams, president of the San Francisco Fed, said that the Fed could raise rates in April and June, if economic conditions improve. Although the dot plot (an FOMC projection of rate hikes) was lowered at the March meeting, he insisted that the Fed had not changed its path of rate hikes. His comments were echoed by Atlanta Fed Dennis Lockhart, who also said that an April rate move was a clear possibility. Lockhart noted that the US economy was holding up well, despite weak global conditions. Lockart said that the economy was close to full employment and the Fed’s target of 2 percent inflation was attainable. However, it should be kept in mind that neither Willams nor Lockhart is a voting member of the FOMC. On Wednesday, St. Louis Federal President James Bullard said that with the US unemployment rate at very low levels, the Fed could be forced to raise rates sooner rather than later.

NZD/USD Fundamentals

Wednesday (March 23)

• 9:00 US FOMC Member James Bullard Speaks
• 10:00 US New Home Sales. Estimate 512K. Actual 
• 10:30 US Crude Oil Inventories. Estimate 2.5M
• 17:45 New Zealand Trade Balance. Estimate 75M

Upcoming Key Events

Thursday (March 24)

*Key releases are highlighted in bold

*All release times are DST

NZD/USD for Wednesday, March 23, 2016

NZD/USD March 23 at 9:50 DST

Open: 0.6836 Low: 0.6782 High: 0.6874 Close: 0.6803

NZD/USD Technical

• There is resistance at 0.6897
• 0.6738 is providing support

Further levels in both directions:

• Below: 0.6738, 0.6605, 0.6449 and 0.6344
• Above: 0.6897, 0.7011 and 0.7100
• Current Range: 0.6738 to 0.6897

OANDA’s Open Positions Ratio

The NZD/USD ratio is showing movement towards short positions. The ratio is currently close to a split between long and short positions, 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.