Daily Economic Commentary: New Zealand

[PipDiddy]

After slipping by more than a hundred pips, the Kiwi was able to bounce back and rally in yesterday’s trading. The NZDUSD recovered most of its losses by rising to 0.7204 from 0.7111.

Earlier today, the Reserve Bank of New Zealand decided to hold its interest rate again at 2.50%. RBNZ Governor Alan Bollard, however, cited that the bank could begin raising its rate as early as June 2010. Until then, the bank will wait and see whether the country’s economic condition at that time would warrant such move. Despite removing the bank’s commitment in holding its rate steady, the Kiwi still slipped against the greenback and yen.

In a separate report, New Zealand’s trade balance has reached NZ$567 million in March from NZ$335 million during the previous quarter, suggesting an improvement in the country’s trade industry. Generally, a rise in exports and trade surplus for that matter is bullish for the Kiwi. This time, though, the Kiwi lost some support versus the safer currencies.

No other economic reports are due today in New Zealand. Nonetheless, the Kiwi could experience some volatility with the release of the US’s weekly initial jobless claims. A better than expected result could spark some hope among investors, leading them to buy the higher yielding currencies like the Kiwi.

[PipDiddy]

The Kiwi went on a wild ride yesterday, falling early on during the Asian session but bouncing up fiercely once the European and US trading sessions went underway. The NZDUSD eventually ended the day higher at 0.7233.

Judging from the lack of economic data from New Zealand yesterday, the Kiwi’s move was most likely caused by improved risk appetite. The S&P 500, which is considered as the broadest measure of the US market, posted a 1.63% gain.

For today, keep an eye open for the US advance GDP report, as it would probably determine the Kiwi’s direction. If it comes out better-than-expected, we could see risk appetite pick up again and take the Kiwi higher.

[PipDiddy]

The Kiwi traded in a mixed manner last Friday, rallying steadily during Asian and European trading sessions but giving up some of its gains during the US trading session. The NZDUSD ended the day at 0.7269, which was slightly higher from its opening price of 0.7232.

The report to keep an eye out for today is the labor cost index at 10:45 pm GMT tonight. The index, which measures the change in the costs businesses incur for labor, is expected to show a 0.4% rise. The labor cost index is usually seen as a leading indicator of inflation, because businesses tend to pass on additional to their customers. This means that a rising labor cost index is considered bullish for the Kiwi.

Another red flag on New Zealand’s economic calendar this week is the unemployment reports on Wednesday. The report is expected to show that joblessness in New Zealand remained at 7.3% for the first quarter of this year. Meanwhile, the number of employed people is predicted to have risen by 0.2%, opposite the 0.1% decline seen during the last quarter of 2009. If the actual figure comes in higher, we could see the Kiwi rally again.

[PipDiddy]

Surf’s up my friend! The Kiwi swam higher in yesterday’s trading session, benefitting from an increase in risk appetite, which let the NZDUSD close 60 pips higher from its opening price. Good way to start off the week eh?

According to a report released late yesterday, labor costs rose by 0.3% in the past quarter, which was just slightly off initial forecasts of a 0.4% rise. Still, this didn’t deter Kiwi bulls from pushing the NZD higher. Remember, rising labor costs are a leading indicator of inflation because firms normally pass on these costs to consumers. I’m going to be keeping an eye out on inflation figures from New Zealand – it may just signal future rate hikes by the RBNZ.

Watch out for the RBA interest rate decision due today at 4:30 am GMT. If the bank decides to hike rates yet again, could this give more incentive for the RBNZ to hike their own rate?

[PipDiddy]

Jay Sean's "Down" was on loop on the Kiwi's iPod all day yesterday as the NZDUSD fell down down down down down to the 0.7200 level. Risk aversion, spurred by never-ending fears of a debt contagion, caused stocks and commodities to tumble.

New Zealand didn't release any economic reports yesterday, leaving the Kiwi even more vulnerable to shifts in risk sentiment. Their employment change and unemployment rate are set for release today and strong figures could provide some relief for the Kiwi. For the first quarter of 2010, a 0.3% rebound in employment is expected. If the actual figure meets or beats expectations, it would mark New Zealand's first quarterly increase in employment in over a year. This could also keep their unemployment rate steady at 7.3%. Watch out for the actual results at 10:45 pm GMT.

[PipDiddy]

Is it a bird? Is it a plane? No, it’s the Kiwi soaring on some good ol’ positive data! Earlier today, the NZDUSD jumped more than 100 pips when employment reports from New Zealand beat expectations by a large margin.

The quarterly employment change revealed that there was a 1.0% rise in the number of employed people during the first quarter of this year, better than the 0.3% increase initially expected. This brought joblessness in New Zealand covering the same period down to 6.0% from 7.1%. Given this strong employment data and with the Reserve Bank of New Zealand’s commitment to keep rates at 2.50% coming to an end in July, it looks like currency traders are starting to price in their expectations for a future rate hike!

Still, this could only serve as a chance for the bears to sell the Kiwi at more expensive levels since risk aversion stemming from euro zone debt problems remains pretty strong. I guess we’ll just have to see what the RBNZ will say about all this rate hike speculation shenanigans!

No data coming out of New Zealand today so the Kiwi’s price action would most likely be driven by news coming out of other major economies, most especially the US initial jobless claims later.

[PipDiddy]

After starting the day on the right foot, the Kiwi tripped and fell as the dollar rose across the board. After trading as high as 0.7277, the NZDUSD pair fell 250 pips in intraday trading, finally ending at 0.7108. Tough luck!

In all fairness, the huge drop had nothing to do with Kiwi news. Across the Pacific, some wild swings in volatility due to some trading errors spurred drops in the US equity markets, which led to wide-spread rallies in both the dollar and yen.

Once again, we don’t have anything coming out from New Zealand today, but taking a look at yesterday, we can see that it is really risk sentiment that is driving the markets. Watch out for news coming out from the euro zone, as any news regarding the Greek bailout package may cause another spike in volatility. Also, keep an eye out for the US NFP report, which in the past has normally garnered a lot of attention.

Of course, given what the markets have been focusing on this past and what happened yesterday, it may not cause too much of a ripple. Nevertheless, make sure you have those risk management rules in check! Better yet, you may wanna stay out of the markets to avoid any whipsaws!

[PipDiddy]

The Kiwi flew all over the place last Friday as the NZDUSD zigzagged its way across the charts. At the end of the day, the Kiwi landed above the 0.7100 handle and closed at 0.7136 against the greenback.

Although New Zealand didn’t release any economic reports at the end of last week, the Kiwi was able to cap off a week’s worth of declines and recover some of its losses. However, commodity prices were still down during the day, suggesting that further weakness among the com-dolls could be in the cards.

While news on the Greek bailout and other euro zone debt troubles could continue to dominate the airwaves, let’s not forget about the economic catalysts for this week. In New Zealand, the main economic event would be the release of its retail sales report on Thursday 10:45 pm GMT. The report could print a 1.2% rise in March retail sales, which would be a considerable rebound over the 0.6% decline seen in February. The core version of the report is slated to post a 1.5% increase, up from the 0.9% drop previously reported.

Well… That’s about it! No other top-tier report are on deck but it might be helpful to check out the release of New Zealand’s manufacturing index on Wednesday. Although this report would most likely have a very minimal effect on the Kiwi’s movement, it could give a good idea about the outlook for the manufacturing industry of the country. Also due on Wednesday is the food price index, which is sometimes considered a leading indicator for consumer inflation.

Since the Kiwi has barely any economic figures to draw strength from, it could be very vulnerable to sudden swings in risk sentiment once again. With that said, stay tuned for any updates on the euro zone debt situation!

[PipDiddy]

The Kiwi turned out to be another beneficiary of yesterday’s risk appetite run. The NZDUSD gapped up to open the week at 0.7197, climbing to a high of 0.7297, before eventually ending the US trading session 0.7227.

With the Reserve Bank of New Zealand’s commitment to keep rates at 2.50% expiring on July, could we see currency traders start buying up the Kiwi with the wind on their backs? For now, the fundamental picture looks hazy, but with the 200 simple moving average on the daily of the NZDUSD holding on as support, it looks like traders remain bullish on the pair.

Once again, New Zealand’s economic calendar will be completely barren today. This means that the Kiwi would most likely get its direction from news coming out of other major economies, particularly Australia, Canada and the US.

[PipDiddy]

It looks like the Kiwi bulls took the day off, as the NZDUSD quietly edged lower and lower during yesterdays trading session. The pair closed about 55 pips lower on the day, to end at 0.7171.

We may be in for another snoozer today, as nothing is scheduled for release from New Zealand. Still, I suggest you watch out for news coming out of the euro zone as a potential catalyst for big waves in the currency markets. With all the uncertainty surrounding the euro zone and the recent bailout package being provided by the EU and IMF, any bad news could cause traders to unload their EURs, and seek safety in the USD. This could lead to a strong dollar rally across the board, with com-dolls like the Kiwi taking a hit.