NZD/USD – New Zealand Dollar Unchanged in Light Holiday Trade

NZD/USD is unchanged on Monday, following sharp gains in the Friday session. The pair is trading at the 0.6930 line in the North American session. On the release front, it’s a quiet start to the week. There are no New Zealand releases on Monday, as the markets are closed for a bank holiday. In the US, the sole economic release is Labor Market Conditions Index. As well, Fed chair Janet Yellen will deliver remarks at an event in Philadelphia.

The  New Zealand central bank is expected to lower rates by a quarter point at the Wednesday policy meeting, from 2.25% to 2.00%. The RBNZ surprised the markets in March, cutting rates from 2.50% to 2.25%. A rate cut could help lift inflation levels, but the housing market remains very tight, and the RBNZ has been reluctant to lower rates. since such a move could exacerbate the housing situation and have negative effects on the economy. There was positive news last week, as the GDT Price Index, which measures prices at a bi-weekly dairy auction, continues to strengthen. The key indicator rose 3.4% on Thursday, following a 2.4% gain in the previous release. Global demand for New Zealand’s dairy products has increased, bolstering the crucial export sector.

The US dollar took a beating on Friday, courtesy of a dismal Nonfarm Payrolls report. The April release fell to just 38 thousand, stunning the markets. Analysts could be forgiven for rubbing their eyes in disbelief at this figure, which was the lowest reading since August 2010. The estimate stood at 159 thousand, which was almost identical to the previous release. The New Zealand dollar took advantage, climbing 140 points on Friday and hitting a 4-week high. The dust hasn’t settled yet, and the NFP report could mean that a June rate hike by the Federal Reserve is no longer on the table. Some of the plunge in the NFP release is attributable to a strike by workers at Verizon, a major communications company. Still, even without this component, the indicator would have posted a gain of only 72,000, well short of expectations. In other US employment news, Average Hourly Earnings, which measures wage growth, posted a weak gain of 0.2%. The unemployment rate fell to 4.7%, but workforce participation dropped to 62.6%.

NZD/USD Fundamentals

Monday (June 6)

• 10:00 US Labor Market Conditions Index
• 12:30 US Fed Chair Janet Yellen Speaks

*Key releases are highlighted in bold

*All release times are EDT

NZD/USD for Monday, June 6, 2016

NZD/USD June 6 at 10:00 EDT

Open: 0.6934 Low: 0.6906 High: 0.6942 Close: 0.6938

NZD/USD Technical

• NZD/USD is showing little movement in light holiday trading on Monday
• There is resistance at 0.7011
• 0.6897 has switched to support following strong gains by NZD/USD in the Friday session

Further levels in both directions:

• Below: 0.6897, 0.6738, 0.6621 and 0.6542
• Above: 0.7011, 0.7100 and 0.7231
• Current Range: 0.6897 to 0.7011

OANDA’s Open Positions Ratio

The NZD/USD ratio is showing short positions with a small majority (53%). This is indicative of a slight trader bias towards NZD/USD breaking out and moving lower.

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.