Daily Economic Commentary: New Zealand

Trading Discussion Economics
#64

Kiwi trading last Friday was quite reserved as New Zealand�s empty economic calendar kept volatility to a minimum. The NZDUSD pair opened the Asian trading session at 0.7092 and closed the week at 0.7087, a mere five pips lower.

On deck this week is New Zealand�s figures on its GDP for the second quarter of 2009. Despite all the positive data popping up here and there, economists predict that New Zealand�s economy is still contracting. The GDP report is expected to print a figure of -0.2%, slightly better than the previous quarter�s -1.0%. The report is due at 10:45 pm GMT, Tuesday.

#65

The NZDUSD once again edged a little lower, as it closed the day at .7067. Still the Kiwi’s losses haven’t been as drastic as those of other pairs - perhaps its higher yield is helping push carry trade and thus shielding it from larger losses.

Late yesterday, the current account was released, which indicated that New Zealand’s deficit shrunk to its lowest level in 4 years, falling to 10.61 billion NZD. While government officials wish they could say that this was driven by exports, they said that the cause was that of falling imports. Finance Minister Bill English said this trend may not continue unless exports pick up. However, the strong appreciation of the NZD may dampen trade.

Uh oh… we’ve been hearing a lot of talk coming out from other central banks regarding the strong appreciation (relative to the USD) in past months - could the RBNZ be next?

Late today, we’ve got New Zealand’s GDP q/q coming out at 10:45 pm GMT. It is expected that GDP fell by just 0.2% in the 2nd quarter, after falling by 1.0% during the 1st quarter. If this report shows a better than expected figure, we may see the NZDUSD push for new highs.

#66

How about a round of applause? A standing ovation? The Kiwi put on quite a show with the NZDUSD going past the 0.7300 mark. News of New Zealand making it out of a technical recession, combined with risk appetite driving commodities and comdolls higher, pushed the NZDUSD to a new yearly high.

New Zealand’s GDP rose by 0.1% in the second quarter, against the consensus of a 0.2% decline in economic activity. The rise in GDP was brought about by a 1.5% uptick in the primary sector, particularly in the fishing, forestry, and mining industries. The services sector also posted improvements, with real estate and business stepping up by 1.5% and communications rising by 1.7%. Also boosting New Zealand’s economy were improvements in migration and in the housing sector.

Still, some say that it’s too early for New Zealand to take a bow and close the curtains on its stimulus policies. The 0.1% uptick is dangerously close to no growth (or worse, negative growth) and it may be premature to conclude that economic growth for the upcoming quarters would be strong and sustainable. Note that the annual pace of economic growth still stands at a negative 1.8%.

Let’s see what consumers think about the state of New Zealand’s economy upon the release of the Westpac consumer sentiment survey at 10:00pm GMT today. Last quarter, the index stood at 106.00 mark, indicating that consumers are optimistic about the economy. Given the latest improvements in New Zealand’s economic indicators, consumers could post an even more optimistic figure this quarter. Could another new yearly high be in sight?

#67

It was a crazy day for the Kiwi yesterday as it swung wildly on both sides. It started the day with a blast when it zoomed against the JPY and the USD during the early part of the Asia session. Its gains, however, was short lived and was completely reversed upon the release of the FOMC statement.

New Zealand unexpectedly pulled itself out of the recession during the second quarter after falling by 0.8% in the previous period. New Zealand�s economy grew by 0.1% against expectations for a 0.2% contraction. The Kiwi surged against the safe haven currencies, JPY and USD, as investors bet that the RBNZ would hike its rate earlier than expected due to the surprise expansion in the country�s GDP.

It early gains, though, were erased later in the US session when the FOMC indicated that it would purchase $1.45 trillion worth of securities and debt at a much slower pace.

Earlier today, New Zealand�s Westpac consumer sentiment index was issued. The index rose to 120.3, its highest mark in four years, from 106.0 thanks to the rising market and low interest rates. The NZD rose slightly following the release.

No other updates are due in New Zealand today.

#68

The NZD traded in a U-shaped manner against the USD yesterday. It was able to gain early in Asia as the Westpac consumer sentiment survey printed stellar results but fell sharply when risk aversion took hold of the markets when the US session came rolling along.

No economic data today but the country�s trade balance which was just released took the NZD backwards a couple of pips. It printed that the country�s trade balance deficit grew to 725 million dollars in August. Data indicates that the drop in exports in August was the largest in more than 23 years. It looks like the NZD�s high value is proving detrimental to the country�s path to recovery.

#69

A lot of indecision in Kiwi trading on Friday, as the pair just ranged throughout the trading sessions. Ultimately, the pair closed at it’s opening price. It seems like investors are unsure on whether to bring the Kiwi higher or to start some dollar buying…

Only a couple of reports are coming out from New Zealand, although I would still be a cautious as they are normally high impact reports.

Firstly, we’ve got building consents data coming out tonight at 9:45 pm GMT. There are no estimates available, although last month, permits rose by 5.0%.

On Wednesday, the NBNZ business confidence index will be released. The index has been on a steady rise the past couple of months, reflecting the optimism that has boosted the NZD as of late. If this report prints another increase, we could see the Kiwi rise further.

#70

Indecisive much? The Kiwi continued to trade in a zigzag manner yesterday as it tumbled down during the Asian and European sessions but regained ground during the US session.

The NZDUSD pair was dragged down as the Greenback rallied after ECB President Jean Claude Trichet expressed his support for a strong USD policy. However, hawkish comments from RBA Governor Glenn Stevens helped keep the Kiwi and its comdoll buddies afloat.

Data on building consents was the only report released from New Zealand yesterday. The number of new building approvals issued rose by 1.7% in August when a total of 1,165 building consents were authorized. This is the highest monthly reading since September 2008.

New Zealand’s economic schedule is report-free for today. Are we up for more zigzag movement from the Kiwi?

#71

The Kiwi continued to range against the greenback and the yen in yesterday�s action as it just stayed well within its previous day�s high and low. It closed positively vis-a-vis the JPY but fell versus the USD.

New Zealand�s building consents, which measures the change in the number of new building approvals issued, rose only by 1.7% to 1,165 new housing units after rising by 4.5% in July. The trend for the number of building consents has been increasing as of late, although, it remains at a low level. Nonetheless, the current level marks its highest score since September of 2008. The NZD rose, albeit meekly, following the release.

Optimism in New Zealand has improved as indicated in the recent increase in the NBNZ business confidence survey which was published earlier today. The index registered a score of 49.1, which is a big leap from the previous mark of 34.2. Firms across all sectors remain optimistic about the welfare of the economy. Firms� intention to employ continued to improve given the 4% rise in their activity expectations.

The NZD gained support following the report.

No other economic updates are due in New Zealand today.

#72

The NZD/USD pair blew past 0.7200 yesterday as risk appetite helped push commodity-based currencies higher yesterday. It closed the US trading session at 0.7223, almost 80 pips from its Asian open.

Another clear day ahead of New Zealand today as no economic report is due for release. This means that the NZD would again be at the mercy of shifts in risk sentiment and economic data coming out of other countries. In any case, we might see some range bound price action go on today as traders hold off trading ahead of the NFP report due tomorrow.

#73

A day after zooming past the 0.7200 price mark, the NZDUSD melted like butter and lost all of its gains. The pair closed yesteray’s trading session at 0.7138, which is lower than it’s opening price from the previous day.

Once again, a quiet day on the New Zealand front as no economic news is due for today. I’ll be looking out for news that could shape risk sentiment, more specifically the data on US labor market conditions.

Good luck trading and enjoy your weekend!

#74

After ranging for an entire week, would the NZDUSD continue to move sideways for yet another week? With a light economic schedule ahead, the Kiwi could have a hard time finding momentum to break out of its range.

The NZIER business confidence index is due 9:00 pm GMT today. After leaping from -65 to -25 in the second quarter, the index could make another strong improvement this third quarter. More so, if the index makes it in positive territory this time, then the NZD could rally. Also, the NZDUSD could trail the AUDUSD especially if the RBA announces a rate hike on Tuesday. But we’ll see…

#75

Up! The Kiwi surged against the USD in yesterday’s action to mark a new yearly high at 0.7315. It closed at 0.7301 from an opening price of 0.7176. As of this writing, the NZD is once again scoring new highs. Will it be able to sustain this upward move? Let’s see.

Demand for other high yielding currencies, specifically the comdolls, advanced yesterday due to he enthusiasm in the US capitals markets. The financials sector carried the whole equities market in yesterday’s session when Goldman Sachs upgraded their rating the US large-cap bank sector, which led to the industry’s 3.3% rise. The NZD’s gain was further supported by the 1.3% gain in the CRB Commodity Index.

Earlier today, the NZIER business confidence index was released. The index for the third quarter leaped to a score of 36 from -25. The current reading marks the index’s 10-year high. Based on the survey, about 36% of the firms were queried see that general business conditions are to improve over the next six months. The NZD got some additional lift following the report.

No other economic updates are due in New Zealand. Though as I’ve mentioned before, the Kiwi could follow the Aussie’s direction after the RBA’s interest rate decision today.

#76

The NZD hopped in on the risk train yesterday when the Reserved Bank of Australia unexpectedly hiked the benchmark interest rate to 3.25% from 3.00%. The NZD/USD pair went as high as 0.7379 during the European session before fading its gains late into the US session.

You see, the NZD/USD tends to have a positive correlation with the AUD/USD as both of them are considered commodity currencies. Whenever something bullish happens with either one of the pair, it lifts the other pair as well.

New Zealand’s economic cupboard is completely empty for today and the rest of the week… We all know what this means: the NZD will be at the mercy of risk appetite and data coming out from other nations.

#77

And the Kiwi keeps on striking! The NZD was able to establish once again a new yearly high, hitting 0.7399 before cooling off and giving up some gains to end the trading day at 0.7350.

With nothing coming out from New Zealand, I’d take a look at commodity trading. Commodities are shooting up, which have carried the AUD, NZD and CAD to new yearly highs. Can the com-dolls continue this bullish run?

#78

It seems like the Kiwi just can’t get enough of hitting new highs! The NZDUSD reached a high of 0.7454 as Australia, its good ole Oceanic neighbor, reported a huge improvement in employment.

New Zealand did not release any economic reports yesterday, with only Australia’s strong employment data boosting the Kiwi higher. Today, New Zealand’s economic schedule is once again report-free… But with an employment report set to affect the Loonie, its other comdoll buddy, the Kiwi could benefit from stronger numbers yet again. Canada’s employment data will be released 11:00 am GMT.

Meanwhile, trade balance figures from the US is also slated to affect the price movement of the NZDUSD. This report, which is due 12:30 pm GMT, is expected to show that the US trade deficit widened from 32.0 billion USD to 32.8 billion USD.

#79

Without any economic catalyst to push the Kiwi higher, the NZD corrected versus the USD last Friday after posting a new yearly high at 0.7454 during the previous day. The NZDUSD’s long term uptrend remains intact. Until this is broken, there’s no other way for the pair but up.

Today (9:45 pm GMT), New Zealand will post its retail sales figures for the month of August. The headline number is expected to post an uptick of 0.6% after falling by 0.5%. The core account is likewise projected to post a 0.5% gain after slipping by the same rate in July.

Meanwhile, New Zealand’s CPI during the third quarter is estimated to be at 0.8%, a tad higher than the previous mark of 0.6%. The index will be published on October 14.

No other top tier economic reports are scheduled in New Zealand this week. The release of several high-profile earnings reports in the US could, however, provide the NZD with some lift if they post some encouraging figures.

#80

The Kiwi traded in a U-shaped manner versus the dollar yesterday. The NZD/USD initially fell during the Asian session but managed to fight back once the European session went underway. Judging from how bulls react whenever the pair dips, expect to see a lot of buying on major support levels.

The NZD/USD pair also surged a few hours ago when the report New Zealand’s retail sales for August printed better-than-expected results. The headline report showed that sales rebounded by 1.1%, almost double the 0.6% forecast. Meanwhile, the core report, which excludes the sales of cars, revealed that sales grew 1.2%. July’s figures stood at -0.5% and -0.6% respectively. The uptick in sales, according to experts, was caused by the improving housing industry, rising household confidence and immigration.

No economic data due for released today but expect to see New Zealand’s consumer price index tomorrow at 9:45 pm GMT.

#81

Up and down movement on the Kiwi front, as the NZDUSD pair traded within a range of 100 pips. Ultimately, the pair closed near it’s opening price and finished the day at 0.7382. Seems like there is a lot of hesitance to bring the pair higher after it hitting yearly highs…

Later tonight, the consumer price index will be released at 9:45 pm GMT. The quarterly report is projected to show that consumer prices rose by 0.8% in the past quarter. I don’t think that this will have too much of an impact on the market – instead, I’d be wary of earnings reports and commodity trading as the main drivers of Kiwi trading in the mean time.

#82

The Kiwi edged higher yesterday as the RBNZ started to pave the way for an exit from its easing strategies. With its central bank trailing the RBA’s hawkish moves, the Kiwi was able to benefit from the bullish outlook for New Zealand’s economy.

Plenty of signs point to the RBNZ raising rates earlier than expected. First, the central bank started to close out a couple of its lending facilities, signaling that the unwinding process is starting to roll out. Second, inflation was reported to have increased faster than expected. CPI rose by 1.3% for the third quarter, which was much larger than the consensus of a 0.8% rise in price levels.

No economic reports are due from New Zealand until the end of the week, leaving the price action of the NZDUSD pair at the mercy of economic releases and earnings reports from the US. Today’s a busy day for the US, which has weekly jobless claims, CPI, and Empire State manufacturing index on tap. Yikes! Would the Kiwi continue to be boosted by strong risk appetite? We’ll find out soon enough! Good luck trading!

#83

The Kiwi marked another new yearly high as better-than-expected New Zealand CPI figures plus risk appetite in the US markets boosted demand for higher yielding assets. The NZDUSD pair went as high as 0.7487 before closing at 0.7431. Presently, it is approaching a key resistance level at 0.7500. Will buying interest remain to push the price higher?

As mentioned in yesterday’s update, New Zealand’s CPI for the third quarter came in at 1.3%, higher than the initial 0.8% estimate. We were given a preview of this from the 1.1% jump in New Zealand’s retail sales figures that were released earlier this week.

The Kiwi blew past 0.7400 with ease following the release.

New Zealand’s calendar is report-free today. The NZD may once again get some lift from the persistence of risk appetite in the US capitals markets. Electronic giant GE is set to publish its earnings report later today. Encouraging numbers could further support buying interest in higher yielding assets such as the NZD.