Daily Economic Commentary: New Zealand

[PipDiddy]

The Kiwi was as flightless as its namesake in yesterday's trading. NZD/USD traded within a 75-pip range before it finished the day 26 pips below its opening price at .8073.

We didn't have anything on tap from New Zealand and that left the currency vulnerable to market sentiment. Unfortunately for the Kiwi bulls, the less-dovish-than-expected FOMC statement caused a wave of dollar buying towards the end of the day.

Our forex calendar is still blank for reports for the comdoll today. So make sure you gauge the market's mood before pulling the trigger on any Kiwi trade, ayt? Keep in mind that the currency usually rallies when risk appetite is up but doesn't do so well when risk aversion is in play.

[PipDiddy]

European currencies might have gone home bruised and battered yesterday but not the Kiwi! The Kiwi remained strong and actually posted a respectable gain versus the safe haven Greenback. From the Kiwi’s opening price at .8073, the currency had gone as high as .8173 before closing the U.S. trading session at .8092,

Despite releasing no major data, the Kiwi seems to be well-supported due to New Zealand’s relatively better economic situation. Market participants are choosing the Kiwi over other Western currencies.

New Zealand’s economic cupboard has nothing on it today, so expect the Kiwi to be mainly driven by news events from other major economies. Pay special attention to the U.S. non-farm payrolls, as it usually has a big impact on the Kiwi’s price action. Be sure to check out Forex Gump’s guide on how to trade the non-farm payrolls.

[PipDiddy]

Wham, bam, thank you NFP! Okay, that didn’t rhyme. But the Kiwi bulls are thanking the NFP anyway! NZD/USD broke above the consolidation on the daily chart last Friday when it climbed by 94 pips to .8187. Who’s the small player now, huh?

Comdoll bulls could thank the better-than-expected NFP report for the rally. While the U.S. unemployment rate rose from 8.2% to 8.3%, the headline NFP figure blasted above its expectations with a 163,000 number. The news sparked a risk rally across markets, which benefited high-yielding currencies like the Kiwi.

Since the quarterly labor cost index at 10:45 pm GMT is the only data out from New Zealand today, it would be a good idea to pay attention to any reports that might influence risk appetite. We all know how the Kiwi bulls and bears love playing tug-o-pips in times when risk sentiment dominates price action!

[PipDiddy]

Up, up, and away! The NZD/USD has finally managed to rise above the 0.8200 handle for the first time since April as it extended as high as .9225. Unfortunately, the pair wasn’t able to sustain its gains as it closed the U.S. trading session 11 pips lower from its day open price at .8201.

According to analysts, Kiwi was well bid because of the likelihood of further monetary policy elsewhere in the world. This gives the Kiwi a high (and possibly rising) interest rate advantage, making it very attractive to investors. In addition, buoyant commodity prices are also providing support for the high-yielding Kiwi.

New Zeland doesn’t have any economic reports scheduled for release later today, so you should probably monitor developments in the U.S. and euro zone instead. Risk sentiment has been the main market driver in the last few days, and any new developments in these two economies could shift sentiment once again.

[PipDiddy]

D’oh! The Kiwi bears defended the .8200 handle yesterday as NZD/USD encountered a strong resistance at the level. In fact, the pair even capped the day 53 pips lower than its open price! Will the Kiwi bulls have a chance at breaking above .8200?

Definitely. Today at 10:45 pm GMT New Zealand will publish its unemployment rate as well as the quarterly employment change numbers. While the quarterly employment rate is expected to stabilize at 0.4%, the jobless rate is expected to go down from 6.7% to 6.5%.

Will the reports disappoint expectations? No other major news are scheduled for release in New Zealand, so make sure you got your eyes on any news events that might affect risk appetite while you’re waiting for the employment numbers!

[PipDiddy]

Despite the topsy-turvy price action, the Kiwi was able to sneak in a few gains against the Greenback as it closed 6 pips up from its .8148 open price. However, these gains were erased as soon as New Zealand released its jobs data. How did that turn out?

New Zealand reported a 0.1% drop in employment change for the second quarter of 2012, causing the jobless rate to jump from 6.7% to 6.8% during the period. This was particularly disappointing because analysts projected a 0.3% rise in employment change for the quarter, which could bring their unemployment rate down to 6.5%. This marked the fourth consecutive quarter of weaker than expected jobs figures and triggered a strong Kiwi selloff in today's Asian session.

There are no red flags on New Zealand's calendar today, which means that the Kiwi could still be reeling from the weak jobs data. Don't forget that China is set to release a couple of inflation reports today which could have an impact on overall risk sentiment. Watch out for that!

[PipDiddy]

Rough sailing for the Kiwi yesterday, which got wiped out thanks to a wave of risk aversion. After testing the .8100 handle, NZD/USD eventually clocked in at .8117, marking a 36-pip loss on the day.

Once again, no hard data on tap from New Zealand, but that doesn’t mean you can take a chill pill and hit the movies to catch Bourne Legacy. Make sure you keep an eye on the equity and commodities markets as this could give you a clue as to what direction risk sentiment is headed towards today.

[PipDiddy]

After having its wings clipped for almost an entire week, the Kiwi managed to pull up for a quick rally on Friday. NZD/USD dipped to a low of .8083 but it jumped above its .8117 day open price and closed at .8133.

Weaker than expected Chinese trade balance weighed the Kiwi down during Friday's Asian session as the report showed a 25.1 billion USD surplus, smaller than the estimated 35.1 billion USD trade surplus. Although this dampened traders' appetite for risk, higher-yielding currencies were able to bounce back towards the end of the day as traders took profit on their short positions.

New Zealand is set to release its retail sales figures at 10:45 pm GMT today so y'all better brace yourselves for some crazy Kiwi action! The core figure is expected to show a 1.0% rebound for the second quarter of 2012, following that 2.5% drop seen during the previous period. The headline figure could show a 0.7% increase, erasing part of the 1.5% decline seen during the first quarter of the year.

Bear in mind that stronger than expected figures could give the Kiwi a boost while weaker than expected results could trigger another strong NZD/USD selloff. Stay on your toes when playing this release!

[PipDiddy]

There she goes, there she goes again! After Friday's relief rally, the Kiwi returned to its losing ways and chalked up another loss against the Greenback to start the week. It lost 30 pips to the American currency as NZD/USD slid sharply in the New York session to end the day at .8085.

But today is a new day, and the Kiwi looks keen on making up for yesterday's losses. Take a look at your charts and you'll see that it has already retraced most of its steps, thanks to the recently released New Zealand quarterly retail sales surpassed expectations. Apparently, headline retail sales were up 1.3% (versus 0.7% forecasts) last quarter! Meanwhile, the core figure fell just slightly below predictions at 0.9% (versus 1.0% forecasts).

In any case, the report seems to have rekindled the market's demand for the Kiwi. But will it be able to sustain its gains? Remember, homies, the day is still young and the U.S. is set to publish heavy retail sales data of its own later on, so be ready for anything!

[PipDiddy]

Aaaahh... Breakout! NZD/USD finally broke below support at the .8080 area yesterday and ended the day at .8049, 36 pips down from its .8085 open price. What caused this breakdown?

New Zealand didn't release any economic reports yesterday, leaving the Kiwi at the mercy of risk sentiment and U.S. data. Unfortunately for the commodity currency, U.S. retail sales came in much better than expected and triggered dollar-buying during the U.S. session. Make sure you drop by my U.S. commentary to see the rest of the details on that report!

There are no reports on New Zealand's schedule today, which means that we might see a repeat of yesterday's price action in case the U.S. prints another set of strong figures. Bear in mind that Uncle Sam is set to release its CPI figures at 12:30 pm GMT today, so don't forget to make the necessary trade adjustments if you're playing NZD/USD then!