NZD/USD – NZ Dollar Dips Below 0.65 Ahead of Key NZ, US Releases

NZD/USD continues to struggle, and is trading just below the 0.65 line in Monday’s North American session. In economic news, New Zealand Retail Sales reports were a mix, as Retail Sales came in at 1.6%, beating the estimate. However Core Retail Sales, with a gain of 1.0%, missed expectations. In the US, the Empire State Manufacturing Index disappointed with a weak reading of -10.7 points. On Tuesday, we could see some volatility from the pair, with key releases out of  New Zealand and the US. New Zealand will release Inflation Expectations and the GTD Price Index, while the US publishes key CPI numbers.

US releases started off the week on the wrong foot, as the Empire State Manufacturing Index came in at -10.7 points in November, its fourth consecutive decline. This points to continuing weakness in the US manufacturing sector, which has struggled despite a stronger US economy. On Friday. Retail Sales and PPI both fell short of expectations. Retail Sales came in at 0.1%, while Core Retail Sales was only marginally better, with a small gain of 0.2%. PPI came in at -0.4%, as the manufacturing inflation indicator posted a second straight decline. There was better news on the consumer front, as U0M Consumer Sentiment improved to 93.1 points, beating the estimate of 91.3 points. On Tuesday, we’ll get a look at US CPI and Core CPI, the primary gauges of consumer inflation. These indicators could play a crucial factor of whether the Fed makes a move and raises rates next month. Strong CPI readings could win over Fed policymakers who are concerned about whether the economy is strong enough to withstand a rate hike.

With the New Zealand economy showing some weakness, there has been pressure on the RBNZ to reduce interest rates. The RBNZ opted not make a move in October, leaving rates at 2.75%. The central bank released its Financial Stability Report last week, signaling that a rate cut in December was unlikely, as it stated that “there is less scope for monetary policy easing to offset a sharp rise in funding spreads.” At the same time, the report expressed concerns about the strength of the housing and dairy sectors, two key areas of the economy. High interest rates will buffer the kiwi to an extent, but the currency will be hard pressed to hold its own against the surging US dollar.

NZD/USD Fundamentals

Sunday (Nov. 15)

• 21:45 New Zealand Retail Sales. Estimate 1.0%. Actual 1.6%
• 21:45 New Zealand Core Retail Sales. Estimate 1.4%. Actual 1.0% 

Monday (Nov. 16)

• 13:30 US Empire State Manufacturing Index. Estimate -5.3 points. Actual -10.7 points

Upcoming Key Events

Tuesday (Nov. 17)

• 2:00 New Zealand Inflation Expectations
• Tentative – GDT Price Index
• 13:30 US CPI. Estimate 0.2%
• 13:30 US Core CPI. Estimate 0.2%

*Key releases are highlighted in bold

*All release times are GMT

NZD/USD for Monday, November 16, 2015

NZD/USD November 16 at 18:30 GMT

NZD/USD 0.6492 H: 0.6543 L: 0.6469

NZD/USD Technical

• NZD/USD was uneventful in the Asian session. The pair posted losses in the European session, but has steadied in North American trade.
• 0.6605 was tested earlier in the day and is an immediate resistance line.
• 0.6449 is providing support.
• Current range: 0.6449 to 0.6605

Further levels in both directions:

• Below: 0.6449, 0.6368 and 0.6233
• Above: 0.6605, 0.6738 and 0.6897

OANDA’s Open Positions Ratio

NZD/USD ratio is close to a split between long and short positions (52:48), 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.