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

NZD/USD is unchanged to start the week, as the pair trades at the 0.67 line in Monday’s North American session. On the release front, New Zealand will release Building Consents and ANZ Business Confidence. In the US, markets are closed for Memorial Day, so there are no US releases. Due to the holiday, we can expect light trade on Monday. On Tuesday, the US releases CB Consumer Confidence.

On Friday, the US released Preliminary GDP for the first quarter. The key indicator, which can be viewed as an economic report card, posted a gain of 0.8%, matching the forecast. This was an improvement above Advanced GDP, which came in at 0.5%. Still, the economy slowed down considerably compared to the fourth quarter of 2015. The export sector has been hurt by the strong US dollar and weak global demand. Oil prices remain low, which has taken a sharp toll on the oil industry. Elsewhere, the UoM Consumer Sentiment report improved in April, climbing to 94.7 points. This marked the indicator’s highest level in 11 months, although it was short of the estimate of 95.7 points. The US dollar responded positively to these releases and posted gains against the New Zealand dollar.

Speculation continues to grow that the Federal Reserve may soon raise rates for the first time this year. The Fed minutes and comments from Fed chair Janet Yellen have renewed market sentiment that the Fed may press the rate trigger this summer, and this has bolstered the US dollar. The minutes were more hawkish than expected, resulting in strong volatility in the currency markets. Odds of a rate hike in June have sharply increased, but the Fed will be hard-pressed to raise rates if key indicators don’t show improvement, particularly inflation numbers. Last week, FOMC member John Williams reiterated that he expected the Fed to raise rates two or three times in 2016. However, there appears to be a gap between the hawkish message some FOMC members are sending out and market sentiment, as many analysts are projecting only one rate hike this year. The guessing game as to what the Fed has in mind is likely to continue into June, but it’s safe to say that another rate move will be data-dependent, so stronger US numbers will increase the likelihood of a quarter-point hike at the June policy meeting.

New Zealand’s trade surplus was much stronger than expected last week, posting an excellent reading of NZ$292 million in April. The markets had anticipated a small surplus of NZ$25 million. A strong increase in fruit shipments was a primary factor in the excellent reading. The New Zealand dollar shrugged off the strong reading. New Zealand’s annual trade deficit was NZ$3.66 billion, less than the estimate of NZ$3.94 billion, but much larger than the deficit of NZ$2.66 billion a year ago in the same period.

NZD/USD Fundamentals

Monday (May 30)

• 18:45 New Zealand Building Consents
• 21:00 New Zealand ANZ Business Confidence

Tuesday (May 31)

• 10:00 US CB Consumer Confidence. Estimate 96.1

*Key releases are highlighted in bold

*All release times are EDT

NZD/USD for Monday, May 30, 2016

NZD/USD May 30 at 11:15 EDT

Open: 0.6693 Low: 0.6673 High: 0.6703 Close: 0.6700

NZD/USD Technical

• NZD/USD has shown limited movement in the Monday session
• 0.6738 is a weak resistance line
• 0.6621 is providing support

Further levels in both directions:

• Below: 0.6621, 0.6542 and 0.6415
• Above: 0.6738, 0.6897, 0.7011 and 0.7100
• Current Range: 0.6621 to 0.6738

OANDA’s Open Positions Ratio

The NZD/USD ratio is showing long positions with a majority (55%), indicative of slight trader bias towards NZD/USD breaking out and moving upwards.

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.