NZD/USD – Kiwi Slide Continues, NZ Dairy Auction Next

NZD/USD has posted losses on Tuesday, continuing the downward movement of the Monday session. The pair is trading at 0.6650 early in the North American session. In economic news, New Zealand will release the GDT Price Index and Current Account. In the US, consumer spending and inflation reports posted soft numbers, as Retail Sales and PPI both showed declines of -0.2%.

New Zealand’s economy is very dependent on the export sector, and faced with weak global demand, New Zealand’s central bank has not shied away from cutting interest rates. A year ago, the benchmark rate stood at 3.50%, but the RBNZ has been steadily cutting rates, and made a further cut last week of 0.25%, lowering rates from 2.50% to 2.25%. This surprised the markets, which had expected rates to remain steady. RBNZ Governor Graeme Wheeler singled out China as the biggest risk to New Zealand’s growth, and left the door wide open for further cuts, stating that the central bank would continue to maintain an easing bias. Still, the economy continues to grow, and GDP for the fourth quarter is expected to show a respectable gain of 0.7%.

All eyes will be on the Federal Reserve on Wednesday, as the Fed concludes a two-day policy meeting. Most experts are expecting the Fed to remain on the sidelines and not raise rates, given current economic conditions. Although the US economy continues to expand, growth has been softer in 2016 compared to the red-hot pace which marked the economy in the second half of 2015. The primary trouble spot in the economy is the inflation picture, as inflation levels remains very low, a result of weak global demand and low oil prices. Fed policymakers are divided on how to respond to persistently low inflation. Some FOMC members favor preempting inflation with a rate hike, while others feel that the economy is currently too fragile for such a move. The Fed will likely maintain its tightening bias and continue to monitor key economic indicators. If the US economy shows strength in the first half of 2016, the markets could be treated to a rate hike in the middle of the year.

NZD/USD Fundamentals

Tuesday (March 15)

• 8:30 US Core Retail Sales. Estimate -0.2%. Actual -0.1%
• 8:30 US PPI. Estimate -0.2%. Actual -0.2%
• 8:30 US Retail Sales. Estimate -0.1%. Actual -0.1%
• 8:30 US Core PPI. Estimate 0.1%. Actual 0.0%
• 8:30 US Empire State Manufacturing Index. Estimate -10.3 points. Actual 0.6 points
• 17:45 New Zealand Current Account. Estimate -2.97B
• Tentative – New Zealand GDT Price Index

Wednesday (March 16)

• 8:30 US Building Permits. Estimate 1.20M
• 8:30 US Core CPI. Estimate 0.2%
• 14:00 FOMC Economic Projections
• 14:00 FOMC Statement
• 14:00 FOMC Federal Funds Rate
• 14:30 FOMC Press Conference
• 17:45 New Zealand GDP. Estimate 0.7%

*Key releases are highlighted in bold

*All release times are DST

NZD/USD for Tuesday, March 15, 2016

NZD/USD March 15 at 9:40 DST

Open: 0.6682 Low: 0.6633 High: 0.6684 Close: 0.6648

NZD/USD Technical

• 0.6605 is providing support
• There is resistance at 0.6738

Further levels in both directions:

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

OANDA’s Open Positions Ratio

The NZD/USD ratio is showing long positions with a slight majority (54%). This is indicative of trader bias towards NZD/USD reversing directions and moving 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.