Daily Economic Commentary: New Zealand

[PipDiddy]

Up, up, and away! The Kiwi soared higher yesterday after the RBA released a confident monetary policy statement. This boosted the comdolls spirits and allowed NZD/USD to reach the .7800 handle yesterday.

Even though New Zealand didn't release any economic reports yesterday, the Kiwi was able to gain ground against the U.S. dollar. It turns out that the RBA statement was much more hawkish than expected and the central bank officials expressed confidence that the Australian economy could bounce back after the floods in Queensland.

For today, New Zealand has its employment data on deck. After rising by a full 1.0% in the third quarter of 2010, employment is expected to be up by 0.2% in the last quarter of the year. However, this could still leave the overall unemployment rate at 6.4%. Stay tuned for the actual figures due 9:45 pm GMT because weaker than expected results could force the Kiwi to return its recent gains.

[PipDiddy]

Yikes! The Kiwi took a huge hit against the Greenback yesterday when risk aversion in markets was jumbled with worse-than-expected employment report in New Zealand. NZD/USD ended the day with a 49-pip loss after dropping to an intraday low of .7718.

New Zealand’s unemployment rate rocketed to 6.8% in the fourth quarter from its 9.4% figure in the third quarter last year. Meanwhile, employment fell by 0.5% during the quarter. These numbers signal a weakening labor market, which could motivate the RBNZ to keep its interest rate at current levels. Looks like the bulls will have to look somewhere for an interest rate hike!

Today’s visitor arrivals report at 9:45pm GMT might not be as volatile as the employment report, but a reading lower than December’s 0.5% increase might signal that tourism, one of New Zealand’s cash cows, is also weakening. Uh-oh.

[PipDiddy]

That’s strike two for the Kiwi! The New Zealand dollar plunged against the Greenback for the second day in a row yesterday as risk aversion settled in markets. Good thing NZD/USD contained its losses to a 54-pip hit after dropping to an intraday low of .7690.

It seems that New Zealand’s dismal employment reports released last Wednesday really made their impact because Kiwi bears continued their feast even after the visitor arrivals report clocked in a 1.4% growth in December, up from November’s 0.6% rise. Since tourism makes up a huge part of New Zealand’s GDP, the data should’ve been bullish for the Kiwi.

But the bears ain’t done partying yet! Bill English, New Zealand’s finance minister, stated in his speech yesterday that the Kiwi’s strength is taking its toll on the economy. He also said that the government’s efforts would help relieve the pressure on the currency, but the bearish comments were enough to send the Kiwi down the charts. Look at that, Mr. English! The bears are helping you!

No economic report is on the board today, but be on your tippy toes for the big NFP report from the US today. The data usually produces huge spikes in the charts, so don’t let any shocks catch your trades!

[PipDiddy]

Just like the bird it was named after, the Kiwi just couldn’t fly last Friday! With no economic data to boost it off the ground, NZD/USD was left at the mercy of U.S. data, which sent the pair tumbling 46 pips to .7687.

Last Friday, we also witnessed a dip in commodities. As Forex Gump has discussed in the past, commodities have been on a tear lately, so last Friday’s drop was quite unusual. Given the Kiwi’s status as a “comdoll,” this may have been one of the reasons why the Kiwi was left grounded.

Sadly, it looks like the New Zealand's news dry spell will continue this week. We’ve got an extremely light week ahead of us as far as economic data is concerned. In the meantime, you might be better of catching the releases of Australia and the U.S. to help you determine where the Kiwi is headed this week.

[PipDiddy]

The Kiwi’s price action was as exciting as watching water boil especially when markets were quiet and New Zealand didn’t release any economic report. NZD/USD ranged for most of the day yesterday, and closed only 6 pips higher than its open price at .7701.

The pip boards are empty again today, but watch the market airwaves closely, will you? I hear that Canada and Australia are releasing economic reports today, so the fellow commodity-related Kiwi might be dragged along for the pip rides.

[PipDiddy]

Yawn… What interest rate hike? The Kiwi bulls shrugged off China’s interest rate hike yesterday as if it was another episode of Parental Control. Even without any economic report from New Zealand, NZD/USD climbed by 45 pips and even reached an intraday high of .7788 before ending the day at .7746.

No reports are due for release again in New Zealand today, but keep your eyes on any delayed reaction to China’s interest rate hike! The Australian and New Zealand dollars usually drop on these instances because their export demand is highly dependent on China’s demands, but we’ll never know if some comdoll bears were just watching the latest episode of How I Met Your Mother and just learned of the news now!

[PipDiddy]

Cue the sad trombone, ‘cause the Kiwi’s feelin’ down! Disheartening words from New Zealand’s finance minister dampened the Kiwi’s spirit as NZD/USD fell 25 pips and closed at .7721.

New Zealand may not have rolled out any reports yesterday, but Finance Minister Bill English’s words were enough to get a bit of action from the currency. According to the finance top dog, New Zealand runs the risk of falling into recession again if the the latest quarterly GDP report shows economic contraction.

He added that New Zealand’s excessive debt is the main culprit behind its weak growth. He estimates a double-dip recession may take place if GDP records a 0.1%-0.2% drop. Woo! It seems there's a lot on the line for New Zealand on this particular release.This only means that we’ve got a potential market-mover when the report is published next month!

Nothing big to look forward to today. The only report due in the next 24 hours is the the food price index at 9:45 pm GMT. Following December’s 0.8% decrease in food prices, a further decline may be indicative of weak future consumer inflation and could possibly weigh down the Kiwi.

[PipDiddy]

Hah! It looks like the Kiwi also caught the risk aversion flu! Apparently, euro zone debt problems were re-ignited yesterday, which sent the high-yielders scrambling for cover. From its open price of .7721, NZD/USD fell almost 100 pips to close the day very weak at .7626.

New Zealand's economic calendar today's presents absolutely nothing to worry about again, so look at the results of the upcoming reports from the U.S. (Trade Balance, Preliminary University of Michigan consumer sentiment survey) for direction. The reports will be key in determining whether NZD/USD will be able to hold above the .7600 this week.

[PipDiddy]

No lovin' for the Kiwi before Valentines! The Kiwi fell sharply against the Greenback last Friday even though New Zealand didn't release any economic reports then. It seems that traders were expecting heartbreaking data from the country... and it looks like they were right!

Over the weekend, New Zealand reported that retail sales fell by 1.1% and that core retail sales slumped by 1.2% in December. This was way worse than expectations of a 0.3% drop in consumer spending during the Christmas holidays. What's worse is that the figures for the previous month suffered downward revisions. Since these reports were released while the forex market was closed, traders would probably show their reactions to these disappointing figures today.

New Zealand's economic schedule is empty for today, but data due from China could provide some volatility for the Kiwi. Watch out for the release of China's trade balance, which is expected to narrow from 13.1 billion CNY to 10.5 billion CNY.

The next set of data from New Zealand are due on Wednesday. New Zealand will report its PPI for the last quarter of 2010 at 9:45 pm GMT. This could show that producer input prices rose by 0.4% during the period while output prices increased by 0.7%. Stronger than expected figures could translate to higher consumer inflation, which could provide a reason for the RBNZ to hike rates soon.

Other than those, no other piece of economic data is due from New Zealand for the week. I'd stay tuned for any updates on commodity prices and any changes in market sentiment to figure out whether the Kiwi could rebound this week or not.

[PipDiddy]

Who wants Kiwis? No one?! Hmm… It seems the release of New Zealand’s latest retail sales figures early in the day was enough to keep buyers at bay! After seeing the disappointing numbers, I wasn't surprised to see that NZD/USD dropped 32 pips to .7573.

New Zealand’s retail sales fell 1.1% in December, which is far worse than the 0.3% drop that was widely expected. OUCH! This decline means consumer spending has now managed to record decreases in two out of the past three months.

Could New Zealand Finance Minister Bill English’s predictions be coming true? Remember, it wasn’t long ago that he warned us about a possible double-dip recession. I’m sure this is one forecast he’s hoping won’t materialize.

We’ve got no reports coming in from New Zealand today. In the meantime, check out what the U.S. has to offer. It might give NZD/USD the push you’ve been waiting for!