Daily Economic Commentary: New Zealand

[PipDiddy]

The Kiwi benefitted from the wave of risk appetite the occurred all throughout the European and US sessions. The NZDUSD closed at a one month high and is currently trading above the 0.7100 handle. Will the Kiwi bulls continue to surf upstream?

The Westpac consumer sentiment report released late yesterday fell for the second consecutive month, printing a reading of 114.7, down from the previous month’s score of 116.9. This indicates that consumer confidence is slowly falling, but that consumers still remain optimistic over the economy. Still, traders ignored this report, as they hitched a ride on the run of increased risk appetite.

Once again, we've got no major data coming out from New Zealand, but that doesn't mean you should chill out and go surfing with Pip Surfer! Make sure that you're aware of any economic data coming out from other countries so you won't unexpectedly get wiped out.

[PipDiddy]

The Kiwi hit the high notes yesterday as it climbed to a high of 0.7179 against the greenback. Even though New Zealand didn't release any economic reports then, the Kiwi was able to deliver a stellar performance as the upbeat sentiment for the commodity-based economies provided a boost.

Strong economic data from Australia and Canada, New Zealand's fellow export-dependent nations, allowed the commodity currencies to extend their gains against the greenback. On top of that, an RBA official remarked that rates would probably rise further while the Canadian Industry Minister noted that their exports are no longer dampened by the loonie's rise. Talk about a major confidence boost for the com-dolls!

Moving along... New Zealand is set to release its visitor arrivals report for February at 9:45 pm GMT today. Since tourism plays a huge role in New Zealand's overall economic activity, this report could have a significant impact on the Kiwi's movement. A decline of 2.4% was seen in January and the Kiwi would most likely appreciate a strong rebound.

[PipDiddy]

After two big days, the Kiwi suddenly turned on its snooze mode and traded flat against the greenback yesterday. The NZDUSD pair actually just traded within a 56-pip range, closing at 0.7147 from 0.7141.

No economic reports came out of New Zealand yesterday. The absence of economic flows from New Zealand was perhaps the reason behind the Kiwi’s lack of price action.

Visitor arrivals in New Zealand for the month of February, which was released earlier today, fell again by 1.9% after already sliding by 2.3% in January. Tourism is one of New Zealand’s major industries. A drop here does not reflect positively on its economy and could be bearish for the Kiwi. The report, however, did not have much impact on the NZD’s short term valuation.

No other major economic reports are due today in New Zealand. The Kiwi, however, could experience some volatility later when Canada’s retail sales and CPI figures are released. Positive numbers in these accounts could spark some risk taking, benefiting the anti-dollars like the Kiwi.

[PipDiddy]

After topping out at 0.7180, the NZDUSD found itself dropping back to 0.7070 last Friday. It seems that risk aversion from all the uncertainty surrounding Greece spilled over to the NZDUSD, pushing it right back near its week open price.

Two important reports are coming out of New Zealand this week.

First up is the country's current account balance on Tuesday. A 1.59 billion NZD deficit balance is expected for the final quarter of 2009, slightly higher from the 1.41 billion NZD deficit from the third quarter.

On Wednesday, the country's GDP report will be released. It is expected to show that the country grew by 0.8% during the last quarter of the previous year. This comes on top of the 0.2% expansion seen the quarter before. For the entire of 2009, the country is predicted to have grown by 0.4%. If the actual figure comes in higher than forecast, we could see the NZDUSD be bought up by currency traders.

[PipDiddy]

The NZDUSD took a dive into the deep end and had some trouble coming back up for air. After plunging to as low as 0.7001, the NZDUSD swam back up, enabling it to finish the day in the shallow end at 0.7065.

We could see some movement later tonight, when current account figures are released. The deficit is expected to widen from 1.43 billion NZD, to 1.60 billion NZD in the 4th quarter of 2009. Did the holiday season have an effect on trade? We'll have to wait and see.

[PipDiddy]

The Kiwi struggled to stay afloat during yesterday's trading but New Zealand's current account balance weighed it down. Would their GDP release today cause another disappointment?

New Zealand's current account deficit unexpectedly widened to 3.57 billion NZD in the fourth quarter of 2009. That's more than twice as much as their previous quarter's deficit! Components of the report showed that an increase in foreign investment income was the primary reason for the wider deficit.

Today, New Zealand is gearing up to release its GDP reading for the fourth quarter of 2009. Could it chalk up 0.8% growth, four times the previously seen 0.2% expansion in the third quarter? My buddy Forex Gump has a bunch of interesting thoughts on that so I suggest you go check it out here! If the actual figure fails to impress, the Kiwi might be forced to give up its recent gains.

[PipDiddy]

The Kiwi closed mixed yesterday as it closed positively against the yen but dropped versus the dollar. The NZDJPY rose to and closed at 64.79 from 63.95. The NZDUSD, on the other hand, slid to 0.7020 from 0.7075.

Earlier today, New Zealand’s GDP growth for the fourth quarter of last year was published. New Zealand’s economy showed a promising 0.8% expansion from October through December of last year, which is four times the 0.2% gain that it had during the previous third quarter. This growth, however, is very much in line with the market’s estimate which is the reason why the NZD failed to rise despite the positive result.

Later at 9:45 pm GMT, New Zealand’s February trade balance will be on deck. Its trade surplus likely expanded to N$355 million from N$269. An expansion in this account could give the NZD some short term boost.

[PipDiddy]

The NZDUSD went for a wild ride in yesterday, rallying strongly during the European session but eventually giving up its gains once the US trading session went underway. The pair closed the US trading session at 0.7042, hardly changed from its Asian open price of 0.7020.

Earlier today, New Zealand's trade balance was released. It failed to meet expectations, posting a N$321 million surplus only for February, instead of N$355 million like initially expected. Still, it was an improvement from January's N$263 million surplus. According to the report, the uptick was mainly caused by the rise in commodity prices and the unexpected jump in farm exports.

No more data coming out today so expect the NZDUSD to be primarily be driven by data coming out risk aversion-appetite flows. The ongoing EU summit could indirectly have an effect on the NZDUSD's value.

[PipDiddy]

The Kiwi stayed within range once again, as there was no major news to provide fuel for a strong move. The NZDUSD closed right smack at its opening price of 0.7037 to end Friday.

Tonight, building consents figures will be available at 9:45 pm GMT. Building approvals have fallen the past two months by over 2.0%. Will we see an upside surprise? Or is a new trend developing?

Later this week, the NBNZ business confidence index will also be released. February's reading of 50.1 was the highest figure ever since the recession began, indicating that businessmen are becoming more and more optimistic. If the report comes in to top it, we could see some Kiwi buying take place.

[PipDiddy]

The Kiwi was able to make some progress in yesterday's trading as it rallied to a high of 0.7117 against the US dollar. Would it be able to hold on to its gains or even push for more today?

Only the building consents data was released from New Zealand yesterday. The report printed a 5.9% increase for February, a strong rebound over the 2.8% slide seen in January. This marked the indicator's first increase in three months as low interest rates spurred construction activity.

New Zealand won't be releasing any economic reports today so risk sentiment could be the main driver of the NZDUSD's price action. Bear in mind that the US is set to release its consumer confidence report at 2:00 pm GMT. Although the index is expected to post an improvement, weaker than expected results could dampen risk appetite and force the Kiwi to return its recent gains.