Daily Economic Commentary: New Zealand

[ForexGump]

Daily Economic Round Up of data from New Zealand!

[ForexGump]

The “Kiwi’s” gain yesterday was more exaggerated as it blew past previous week’s high and the significant 0.6500 price level yesterday. Positive economic data that came out of New Zealand helped immensely. Its trade balance printed a whopping 858 million dollar surplus, more than three times the 280 million dollar surplus initially predicted.

Later at 5 am GMT, National Bank of New Zealand will release its report on business confidence. The report attempts to predict the direction of the economy for the next 12 months. It does this by surveying manufacturers, builders, retailers, agricultural firms and service provides whether or not they are optimistic about the economy. A reading above baseline zero means they are more optimistic than the economy than they are pessimistic.

[ForexGump]

No economic reports were released from New Zealand yesterday. The NZD/USD began the day by making headway towards higher highs but found itself sliding down as the US released worse-than-expected consumer confidence data. The pair broke below the psychologically significant 1.6500 level and found some support around the 1.6450 area.

Data on commodity prices, as measured by Australia and New Zealand Banking Group, are due at 11:00pm GMT today. Although no forecasts have been given, Australia will be releasing its data on commodity prices and we can expect New Zealand’s data to follow suit.

[ForexGump]

The NZD moved lower against the other currency big boys with the resurgence of some risk aversion in the capitals markets. Trading of the NZD, however, was still confined within its daily range.

New Zealand saw an action packed session yesterday. Sike! No economic reports were actually released. The NZD just followed leads from the other majors regarding its movement yesterday.

Today (1:30 am GMT), the Australia and New Zealand banking group will release its latest commodity prices. Yesterday, the prices of Australian commodities fell further by 29.3% after falling by 23.4% during the previous period. We might see a similar decline in New Zealand’s account given this. The ANZ commodity price index in May registered a 2.7% increase. Commodities are one of the major exports of New Zealand. Hence, any decline in prices may weigh down on its economy and the NZD.

[ForexGump]

The NZD took a solid beating from the USD once again yesterday as it fell almost 150 pips from its Asian open price. Support at 0.6400, a key technical and psychological support level failed to hold as sellers took the pair all the way back down, just a few pips shy last week’s low. Risk aversion, as usual, was the culprit!

The Australia and New Zealand banking group released its commodity price index also yesterday. It sang the same tune as the Australia’s commodity price index when it printed a measly 0.2% increase in prices for June. This was a stark contrast from the 2.4% increase we saw last reporting period.

Nothing on New Zealand’s economic cupboard... And with US on vacation mode, we might see thinner than usual liquidity today. Enjoy the weekend folks!

[ForexGump]

The Kiwi posted some small gains against the USD after 3 consecutive days of losses. The NZD had fallen over 250 pips from the weekly high as the dollar rallied throughout the week.

A government report released over the weekend showed that housing prices rose by 0.4% in the last quarter, the first increase in 6 quarters. It appears the RBNZ’s rate cuts are having a positive effect on the market as they allow consumers to have lower mortgage rates.

Today, the NZIER Business Confidence report will be released at 10:00 pm GMT. This index surveys manufacturers, retailers, wholesalers and service providers on current economin conditions. As of now, there are no forecasts as to what level the index will have. The previous release had a reading of -65. Note that scores below 0 indicate pessimism and that this is a high-impact report. There could be extra volatility around the time of it's release.

[ForexGump]

ZZZZZZZ.... oh sorry, is it Friday already? It’s been a slow week for New Zealand, which only had one economic report that came out. As expected, NZD trading was largely affected by risk sentiment. Yesterday we saw the USD drop, which caused the NZDUSD pair to close higher. Is there a shift in risk assessment? Or is it merely a retracement?

Next week should be a little more interesting on the New Zealand front, with retail sales data coming out late on Sunday, and inflation (CPI report) due on Wednesday.

[ForexGump]

After a relatively slow week, is the NZD gearing up for a manic Monday? Retail sales and core retail sales have both been upbeat, posting 0.8% and 1.6% increases respectively. However, commodity prices have been sliding down, casting a bearish outlook on the NZD.

The rise in New Zealand's retail sales boosted hopes that the nation could emerge from the recession earlier than expected. Record-low interest rates and income tax cuts seem to have done the trick for their economy. RBNZ Governor Alan Bollard projected that economic growth could turn positive by the fourth quarter of this year.

The fall in commodity prices, however, acts as counterweight to a potential NZD rally. Oil prices retreated below $60 per barrel while gold prices dropped by $3.70 to $912.50 per ounce.

Hard-hitting economic reports from New Zealand remain scarce, with only CPI data due on Wednesday. This leaves the NZD/USD eyeing the southbound route for the rest of the week, unless a surge of risk appetite calls for a U-turn.

[ForexGump]

The NZD started the day on a positive note after the retails sales reports showed some better-than-expected results. It gains, however, quickly flew as the NZD found itself under the sand for the remaining part of the Asia session up until the start of the US trading session. The NZD was then able to shrug off its early losses to close the day up against USD and the JPY. Such wouldn’t be possible without the help of Meredith Whitney.

As mentioned, New Zealand’s retail sales for the month of May came in better than expected by gaining 0.8%. The account was only expected to rise by 0.3% following a 0.5% jump in April. Retail sales measure the total value of sales at a retail level. The gains in the figure further add that the RBNZ’s low interest rates and the government’s tax cuts are spurring some economic activity. New Zealand’s core retail sales, which exclude automobile sales, also gained by 1.6% after coming in flat in April. The figure was only projected to post a 0.5% rise.

In the mean time, the NZD rose for the most part of the US session as buyers once again flocked the US capitals markets. The US financials buoyed the entire stock market with Meredith Whitney’s ‘buy’ recommendation on Goldman Sachs. Meredith Whitney is the founder of Meredith Whitney Advisory Group LLC.

No economic reports are due today in New Zealand. The NZD’s movement may be dictated by the sentiment in the US market. The NZD may benefit once again from the positive expectation in the US PPI and retail sales.

[ForexGump]

The NZD soared yesterday, breaking the 1.6400 handle versus the USD. The sharp move upside was most likely caused by traders increased appetite for risk as New Zealand’s economic cupboard was completely barren.

Today we’ve got New Zealand’s consumer price index at 10:45 pm GMT. It would most likely print a 0.5% increase in prices. The actual result probably won’t be too far away from the consensus since economists have been pretty spot on target with their predictions with regards to New Zealand’s CPI the month’s before.

The currency would still probably be driven by degrees in risk appetite so it’d be best to keep an eye out for any significant shift in risk sentiment.