NZD/USD – Little Movement Ahead of RBNZ Financial Stability Report

After a brutal week to start the month of November, the New Zealand dollar is enjoying a quiet week. NZD/USD is trading just above the 0.65 line in Tuesday’s North American session. In economic news, US NFIB Small Business Index met expectations, while Import Prices disappointed with a fifth straight decline. The New Zealand central bank will release its Financial Stability report, followed by a press conference hosted by RBNZ Governor Graeme Wheeler.

NZD/USD continues to struggle, and last week plunged 250 points, its worst weekly slide since January. The RBNZ will be the focus on Tuesday, as the central bank releases its Financial Stability report, which details the RBNZ’s projections for inflation and economic growth. Any hints about a change in monetary policy could have a sharp effect on the New Zealand dollar. The central bank did not adjust interest rates in October, leaving the benchmark rate at 2.75%. With the next rate decision not until December, we could get an inkling of the central bank’s monetary plans from the Financial Stability report and follow-up remarks from Governor Graeme Wheeler.

The US dollar closed last week with strong gains at the expense of the kiwi, courtesy of the outstanding Nonfarm Payroll report on Friday. The key indicator surprised the markets with a surge of 271 thousand, crushing the forecast of 181 thousand. It was the indicator’s best showing since May. As well, hourly wages were up 0.4%, bringing the annual increase to 2.5%, and the unemployment rate dipped to 5.0%. These excellent readings are further signs that the US economy is close to full employment. The positive news continued on Monday, as the US Labor Market Conditions Index gained 1.6 points in October, up from a flat reading of 0.0 points a month earlier.

The Federal Reserve said in its October policy statement that employment data would be an important factor in a rate decision, and the strong NFP reading on Friday has greatly increased the likelihood of a Fed hike. Still, a Fed rate hike should not be considered a done deal, as not all US releases have been as strong as employment data, such as manufacturing and inflation numbers. Low inflation points to slack in the economy, and the Fed policymakers will need to be assured that the US economy can withstand an interest rate hike before voting in favor of raising rates.

NZD/USD Fundamentals

Tuesday (Nov. 10)

• 11:00 NFIB Small Business Index. Estimate 96.4 points. Actual 96.1 points 
• 13:30 US Import Prices. Estimate -0.1%. Actual -0.5%
• 15:00 US Wholesale Inventories. Estimate 0.0%.
• 18:01 US 10-year Bond Auction
• 19:30 US FOMC Member Charles Evans Speaks
• 20:00 RBNZ Financial Stability Report
• 20:05 RBNZ Governor Graeme Wheeler Speaks
  

*Key releases are highlighted in bold

*All release times are GMT

NZD/USD for Tuesday, November 10, 2015

NZD/USD November 10 at 15:25 GMT

NZD/USD 0.6527 H: 0.6556 L: 0.6515

NZD/USD Technical

• NZD/USD was flat in the Asian session. The pair posted slight gains in the European session but failed to consolidate. NZD/USD has limited movement early in North American trade.
• 0.6605 switched to a resistance role following the New Zealand dollar’s sharp losses late last week.
• 0.6447 is an immediate support line.
• 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, 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.