Daily Economic Commentary: New Zealand

[PipDiddy]

Whew, that was a close one! After dropping to an intraday low of .8081 late into the U.S. session, NZD/USD quickly rebounded and ended the day 5 pips higher at .8149. What saved the Kiwi this time?

Though no economic reports were released from New Zealand yesterday, news of progress in Greece’s bailout problems provided investors relief just as the day was about to end. As I’ve written in my euro piece, the EU and the IMF indicated that they are willing to sign a check for Greece’s second bailout IF the Greek Parliament manages to pass the new set of austerity measures.

No data will be released from New Zealand again today, so the Kiwi will most likely play on risk sentiment… again. Was the rebound in high-yielding assets a sign of shifting risk sentiment, or will traders go back to selling once the EU/IMF hype goes down?

[PipDiddy]

Kiwi bears are rawrin' lately, huh? After falling by almost 150 pips on Friday, NZD/USD even gapped down by 20 pips over the weekend! Now that it's edging closer to the .8000 major psychological level, this week's economic data could determine whether the pair will make a bounce or go for a break.

New Zealand didn't release any economic reports last Friday, and there was nothing stopping the Kiwi from getting battered by risk aversion.

Just a few hours ago, New Zealand printed a worse than expected trade balance, which was probably why the Kiwi started the week off on a weak note. Their trade surplus landed at 605 million NZD, far less than the predicted 1 billion NZD surplus. This was also almost half the previous period's 1.15 billion NZD trade surplus. Components of the report revealed that the drop was due to a large decline in exports of dairy products.

No other economic reports are due from New Zealand for the first half of the week, which means that this downbeat bias from their poor trade balance figures could keep dragging the Kiwi lower. Unless risk appetite picks up, that is. Stay on your toes!

[PipDiddy]

No love for the Kiwi! You’d think that you’d see some sort of bounce from the New Zealand currency after the way that it gapped down against the USD to start the week… but that clearly wasn’t the case yesterday! NZD/USD started low and stayed low as it ended the day at .8057, 45 pips below last Friday’s close.

As I mentioned yesterday, New Zealand’s dismal trade balance data did quite a number on the Kiwi and never really let it recover. I actually dug in a little deeper and found out that one of the reasons why New Zealand’s surplus came in higher than expected is because of the importation of aircraft parts to the tune of 214 million NZD!

Anyway, we’ve no New Zealand data to work with today, so we may have to chew on that report a little longer. In the absence of ground-breaking news or shifts in market sentiment, the Kiwi’s bearish momentum will probably continue to drag it lower.

[PipDiddy]

Up, up, here we go! The Kiwi may have been off to a weak start during the Asian session but it managed to stage a strong rally during the U.S. session and end the day 18 pips above the .8100 handle. Will it be able to hold on to its gains today?

New Zealand didn't release any economic data yesterday, which means that the Kiwi's movement was mostly driven by risk sentiment.

Today, New Zealand is set to report its building consents data for May. Recall that building consents were down by 1.6% last April, erasing part of the 2.2% jump seen the previous month. If building consents print a rebound for May, we might see NZD/USD go for another rally. Stay tuned for the actual release at 10:45 pm GMT.

[PipDiddy]

Boom! The Kiwi was simply explosive yesterday as improved risk appetite launched it further up the charts. NZD/USD rose 126 pips, recording its biggest rise in over three months. What's in store for the Kiwi today?

Thanks to the Greek Parliament's decision to pass its austerity package, the Kiwi and the comdolls were able to stage solid rallies during yesterday's trading.

So far, the Kiwi isn't showing signs of slowing down! Thanks in part to the building consents report released just a few hours ago, Kiwi bulls remain in full control of NZD/USD. Building consents rose a healthy 2.2% last month, which is exactly what you'd want to see after the 1.2% decline in April.

The NBNZ business confidence report also waved a red flag in front of Kiwi bulls and urged them on as it printed a solid rise in confidence. The index leapt from 38.3 to 46.5 in June.

With risk appetite up and positive economic data supporting its rise, the bullish momentum on NZD/USD may carry it higher up the charts today. Who knows, we might even see the pair finally break above .8300!

[PipDiddy]

Ki-weeeeeee!!!! The Kiwi started the day off on a solid note and there was just no turning back! NZD/USD set a new all-time high at .8319, before settling for a more modest gain of 42 pips to end the day at .8288.

With commodities surging, it’s no surprise that the Kiwi has been so dominant. In fact, RBNZ Governor Alan Bollard pointed this out yesterday, saying that the economy was benefiting from the rising prices in milk, meat, and lumber, which are some of New Zealand’s biggest exports. As long as commodities remain steady, the New Zealand economy should benefit and in turn, so will the Kiwi.

[PipDiddy]

Just like my uber crush Maria Sharapova who lost the Wimbledon title to Petra Kvitova, the Kiwi choked in its performance against the dollar on the final day of last week’s trading. NZD/USD rallied to an intra-week high of .8319 but it ended Friday’s trading 7 pips lower from its opening price at .8278.

With the Kiwi already trading at its all-time high and without any economic report from New Zealand, I have to say I wasn’t surprised to see the Kiwi falter on Friday. Hmmm, I wonder if today would be any different for the comdoll.

If you’re planning to go long on the currency, keep your fingers crossed that there would be enough risk appetite to go around and offset the negative vibes that might have come from a disappointing report released earlier. ANZ reported that commodity prices in New Zealand for June declined by 1.2% following rising 0.3% in May.

[PipDiddy]

Wouldn’t it be nice to just sit back and chill out? Well, that’s exactly what the Kiwi did yesterday! With no data scheduled for release, NZD/USD traded within a range tighter than Big Pippin’s pants! The pair traded within a range of just 18 pips, closing 11 pips higher at .8293.

Earlier today, the NZIER business confidence index was released. It appears that businessmen have become more optimistic about the economy, as the index printed at 27, a complete reversal from last quarter’s release of -27. And why wouldn’t they? The economy seems to be picking up, and with commodities still on the rise, it should remain steady for the rest of the year.

No biggies for the rest of the day, but do watch out for the RBA rate decision, which may prove to be a catalyst for a big move in the markets. Take note that whenever we see a strong move in the Aussie, we sometimes see a similar, although subtler, move in the Kiwi.

[PipDiddy]

Just when Kiwi bulls were about to celebrate the comdoll's new all-time high against the dollar at .8330, bears pounced in on NZD/USD until the pair closed 47 pips below its opening price at .8245.

Risk aversion stemming from concerns of a possible default for Greece and talks about another rate hike from China had investors selling higher-yielding currencies.

On top of that, a dairy auction showed that dairy prices were ticking lower. This might have been bearish for the currency since the decline in one of New Zealand's primary exports translates to lower profits and softer inflation pressures.

All these might have clouded the stellar business confidence report which showed that businessmen were a whole lot more optimistic during Q3 2011 with the index at 27, versus the -27 reading we saw for the previous quarter.

With that said, make sure you keep tabs on market sentiment to help you gauge which direction the Kiwi would take in today’s trading.

[PipDiddy]

Range, range, range. Despite the overall aversion to risk of the market yesterday, the Kiwi was able to stay afloat. NZD/USD mainly traded between a tight range with resistance at .8300 and support at .8245. By the end of the U.S. trading session, NZD/USD was trading at .8258, barely changed from its opening price at .8245.

The Kiwi’s non-movement was also due to the absence of economic data. Yesterday, there were no economic reports that came out of New Zealand.

Today, we could see the Kiwi move in a similar fashion as New Zealand’s economic calendar presents nothing of interest again. Do watch out for the ADP non-farm employment change from the U.S. though… It could indirectly affect the Kiwi’s price action!