Daily Economic Commentary: New Zealand

[PipDiddy]

Another day, another loss! I’d hate to be in the Kiwi’s shoes right now. It extended its losing streak to 5 against the Greenback yesterday as NZD/USD slipped 65 pips to .7508.

With no economic releases from New Zealand, one possible explanation for the Kiwi’s dive is China’s latest inflation numbers. Yes, China’s CPI was lower than expected, but if you were to eliminate the price of food from the equation, you would see that inflation rose to its highest level in at least six years.

High inflation, of course, adds further pressure for the PBoC to hike rates. Unfortunately, doing so could be detrimental to New Zealand’s exports as it could result in a weaker demand for its goods.

New Zealand’s got another blank economic calendar today. But tomorrow morning, it will be publishing its quarterly PPI input data. A 0.4% rise is expected to follow up the 0.7% uptick in Q3. Stay tuned for this release as a strong reading would imply rising consumer inflation in the future.

[PipDiddy]

Screeech! Bulls finally stepped up and hit the breaks on the dollar’s five-day winning streak against the Kiwi. Yesterday, NZD/USD closed 41 pips higher at .7554 from its opening price.

Aside from risk appetite spurred by a tinge of optimism from the Fed, there was also the better-than-expected report from New Zealand to back the Kiwi up on the charts.

We saw yesterday that manufacturing activity picked up in January with the Business NZ Manufacturing index printing at 53.7 to follow its 53.2 figure in December.

On the contrary though, the PPI report for the fourth quarter of 2010 showed that inflation wasn’t as hot as analysts had predicted.

It showed that output prices, otherwise known as factory gate prices, only rose by a measly 0.2% and fell short of the 0.9% uptick that the market was eyeing. Meanwhile, prices of primary materials that manufacturers use increased by 0.9%, just as expected.

But eh, it seems like traders just shrugged off the disappointing inflation report.

There’s nothing left on our economic calendar for the Kiwi for the rest of the week. Boo! But stay tuned to Fed Reserve Chairman Ben Bernanke’s speech later. If markets find his words giddy enough, we may just see another round of risk appetite fuel the Kiwi's flight on the charts!

[PipDiddy]

Back to back, baby! The Kiwi was once again able to regain some of its recent losses to the Greenback as it rode a strong manufacturing index reading to Winners’ Town! NZD/USD scurried up 36 pips to finish the day at .7590.

Thanks to the rise in the Business NZ manufacturing index, Kiwi bulls were able to continue their pip-party! The index picked up from 53.2 to 53.7 last month, showing continued expansion in the manufacturing sector. Will this trend continue? Something tells me that given the repairs necessary to rebuild parts of New Zealand after the Canterbury earthquake, we might continue to see this sector post gains in the coming months!

As for New Zealand’s PPI data, we got mixed results. PPI input came in as expected at 0.9% while PPI output fell short of the forecasted 0.9% rise and only showed a 0.2% increase in the price of goods sold by manufacturers. It looks like those hoping to see a rate hike may have to wait until the second half of the year because this report shows inflationary pressures are weak at the moment!

Nothing more to see from New Zealand today! But stay on your toes because my homeboy Ben Bernanke is scheduled to speak at 1:00 pm GMT. His words tend to rock the Greenback, so if you’re looking to trade NZD/USD today, listen closely!

[PipDiddy]

Another day without data, another win on its card! With no economic reports on tap, risk sentiment and commodity prices directed the Kiwi last Friday. Luckily, risk appetite was alive and kicking, and it boosted NZD/USD up 24 pips to .7614.

Commodities were on the rise last Friday so it was no surprise that the Kiwi, as a comdoll, continued to soar. Though its economic calendar was light last week, it managed to record three straight days of gains, thanks to a healthy risk appetite and a bounce in commodities.

The report to look out for this week is the quarterly inflation expectations data due tomorrow at 2:00 am GMT. Last time this release came out, it reported that business managers were expecting a 2.6% rise in prices over the next two years. An upward revision to this figure would imply rising expectations which would strengthen the case for another RBNZ rate hike.

[PipDiddy]

With some U.S. traders still out on break, action on NZD/USD yesterday was as flat as a pug’s face. It traded within a 45-pip range but lucky for the Kiwi, there were enough bulls to push it 9 pips higher from its opening price. At the end of the day, it was at .7638.

Perhaps the rise in commodity prices offset the bad vibes that came from the worse-than-expected services PMI and worries about the ongoing conflict in the Middle East. It was reported that New Zealand's service sector activity slowed in January when the index came in lower at 50.8 than its previous reading at 52.1.

Then again, the increase in consumer spending might have also helped the Kiwi stand its ground against the scrilla. The credit card spending report for January printed at its 9-year high at 5.1% yo!

Earlier today, we saw that inflation expectations remain flat at 2.6% for the first quarter of the year. I wonder if this will be enough for the Kiwi to hold on to its gains amid risk aversion. Make sure you gauge market sentiment ayt? Good luck!

[PipDiddy]

The Kiwi dropped like a rock across the board yesterday as a huge earthquake hit New Zealand yesterday. News reports said that the 6.3 magnitude earthquake took at least 65 casualties and the damages it caused could weigh down heavily on the economy. At the end of the day, NZD/USD was trading at .7457, 181 pips lower from its opening price.

Nothing on New Zealand’s economic calendar today, so it would be best to monitor the earthquake situation in the region. Similar to yesterday, it would probably dictate the Kiwi’s direction.

[PipDiddy]

What a slow day! The absence of economic reports kept NZD/USD bound within an 80-pip range yesterday. It found resistance at its day high at .7514 and support at .7434. At the end of the day, NZD/USD closed at .7462, a mere 5 pips higher from its opening price.

New Zealand’s economic calendar has nothing to offer again today, so NZD/USD’s price action could mimic yesterday. Keep a close eye on the previous day’s highs and lows as they could very well hold!

[PipDiddy]

After dipping to its intraday low at .7430 against the dollar, the Kiwi braced itself and sang, "Up, up, here we go!" It then became a rocketeer for the rest of the day's trading, peaking at .7510 before landing at .7484 with a 24-pip win.

We didn't have any economic report from New Zealand. Good thing mixed economic reports from the U.S. might have convinced traders to dump their dollars.

Perhaps rising oil prices also added to the dollar's weakness. Word on the street is that some central banks may be forced to hike interest rates soon to tame inflation spurred by increasing commodity prices. But since inflation is muted in the U.S., traders aren't expecting the Fed to holler a rate hike soon.

Speaking of interest rates, rumor has it that the RBNZ could cut interest rates in March. Yep, CUT interest rates. Economic gurus are saying that with the damage of the Christchurch quake estimated at 12 billion NZD, the central bank could lower rates to help spur growth.

With that said, remember to be extra careful when you trade the Kiwi, ayt?

[PipDiddy]

Oh Kiwi, you're so fine you blow my mind! The absence of economic reports was no problem for the comdoll as NZD/USD ended Friday’s trading 24 pips higher from its opening price at .7509. And that’s three wins in a row for the Kiwi yo!

Economic gurus think that perhaps traders are getting tired of the dollar with murmurs of QE3 going around. With that said, perhaps the better-than-expected trade balance report for January will give traders more reason to dump the dollar in exchange for the Kiwi. Earlier today, it was reported that exports outpaced imports by 11 million NZD during the month and overshot expectations which were for a trade deficit of 25 million NZD.

Don't get too giddy rooting for the Kiwi though. Remember that later we’ll also have the NBNZ business confidence report for February at 2:00 am GMT. Watch out for a figure higher than December’s reading of 29.5 because this will most probably be bullish for the Kiwi. But err, I wouldn’t keep my hopes up for the figure to reflect optimism from manufacturers after the devastating earthquake that hit Christchurch last week.

[PipDiddy]

The Kiwi sure likes its pips fast and its retracements down low! Improvement in risk appetite and better-than-expected reports from New Zealand boosted NZD/USD to its intraday high of .7554, with the pair eventually capping the day 29 pips higher than its open price at .7523.

The NBNZ business confidence report might have given the Kiwi a lift when clocked in at an index number of 34.5 in February against January’s 29.5 figure. Then, the overseas trade index data also showed a gain of 0.6% for the fourth quarter, which is a lot better than the 3.0% growth in the third quarter last year.

Only the ANZ commodity prices report today at 2:00 am GMT is scheduled for release in New Zealand, so keep an eye on risk sentiment!