Daily Economic Commentary: New Zealand

The Kiwi staged a major 150-pip fall against the greenback as traders took profit for the week last Friday. However, looking at how the dollar has been sold off furiously throughout the week, the move downwards was most likely a correction than the start of the new trend.

This week lacks any major economic data as only the Visitor Arrivals and Credit Card spending reports are due. These reports are pretty much outside the economic data radar of currency traders so event risk is most likely low. In any case, the Visitor Arrivals for September is due on Tuesday at 9:00 pm GMT while the result on credit card spending for the same month is due at 2:00 am GMT on Wednesday.

After dropping like a brick to end last week, the Kiwi had a comeback Monday! The NZDUSD pair zoomed away and set - once again - closed at a new yearly high at 0.7567.

Not much high impact news coming out over the next couple days, with only the visitor arrivals report due at 9:45 pm GMT tonight and credit card spending data tomorrow at 2:00 am GMT. I’d be on the lookout for more news regarding commodity trading as something that could move the NZD.

With an interest rate decision coming up next week, could traders be gearing up for a potential rate hike by the Reserve Bank of New Zealand? If so, we may see the NZD keep trekking higher…

After sprinting to an intraday high of 0.7576, the NZDUSD lost steam and tumbled to a low of 0.7442. New Zealand’s economic calendar was free from high-impact reports as economic releases from the US directed most of the NZDUSD price action yesterday.

Weak PPI and housing data numbers from the US caused investors to doubt the strength of an economic recovery. As a result, the USD surged as risk aversion heightened, causing the NZDUSD to take a quick break from its recent rallies.

Data on visitor arrivals was the only report on New Zealand’s docket yesterday. This report posted a large gain as visitor arrivals rose by 3.8% in September. Last August, visitor arrivals were down by 0.5%. However, this report didn’t have much of an impact on the NZDUSD movement.

For today, another low-impact report is on schedule. Data on credit card spending is due 2:00 am GMT. After dropping by more than 2% in June and July, credit card spending rose by 0.1% in August. Overall spending probably increased in September, given that consumers are feeling more confident with their economic outlook and financial standing, and this could pump up credit card spending as well.

Today’s US economic schedule is devoid of any high-impact reports as well but with several earnings reports due, risk sentiment could be the major factor in determining price action. Would the NZDUSD resume its rally once risk tolerance kicks in? We’ll find out soon enough! Good luck fellow traders!

Up it went. Similar to the other “high yielders,” the Kiwi staged another strong performance yesterday as it marked a new yearly high yet again. The NZDUSD pair climbed to a new high of 0.7635 before closing at 0.7576. Will today be another green candle? Let us see…

No market moving events happened in New Zealand yesterday. During the US session, positive earnings from two notable financial firms Morgan Stanley and US Bancorp have kept buying interests on the high yielding currencies kicking.

New Zealand will be report-free today as well. In the US, unemployment claims for the week ending October 17 will be published. Initial claims are expected to reach 516,000 after the previous week’s 514,000 tally. Better-than-expected results could spark another risk appetite rally which in turn could benefit the NZD.

The Kiwi, like most major currencies, fell initially during the Asian session when risk appetite faded but gussied up and rallied during the US session. It closed at 0.7590, just ten pips higher from its Asian opening price.

No economic data due today but next week will be big for the Kiwi as the Reserve Bank of New Zealand will be announcing its decision on the country’s interest rates. With the Reserve Bank of Australia first to hike rates among the G20 nations, will we see the RBNZ follow suit?

Let me say just one more thing… For the last two Fridays, we saw how the Kiwi fell as investors took profit from its rally. It might be good to keep this in mind while trading today!

Make it three in a row! For the third consecutive Friday, the Kiwi fell, leaving the NZDUSD pair to close the week at 0.7541.

The kiwi fell as the risk aversion (and possible profit taking) took over during Friday’s session as US equities fell. Could we be in line for a dip after the strong bullish run by the kiwi this month?

Nothing on deck today from New Zealand, or from other countries for that matter. We could see more range trading take place before things heat up later this week when the Reserve Bank of New Zealand releases its interest rate decision this Wednesday.

Recently, the Reserve Bank of Australia decided to hike interest rates. Will NBNZ bankers follow their lead, or will they be cautious and keep the rate at 2.50%? In any case, mark this down on your calender and be ready for some big splashes in the market!

The USD dominated over the major currencies yesterday, pushing the NZDUSD below the 0.7500 handle. No economic reports were released from New Zealand but the weak PPI data could have dragged the NZDUSD lower.

Australian producer prices increased less than expected as the strengthening AUD weighed down on import costs. Since the NZD has been appreciating in lockstep with the AUD, traders became worried that New Zealand’s economy will experience the same downward pressure on inflation.

Also cautioning against the strength of the NZD was New Zealand Prime Minister John Key who said that their economy would be able to grow faster without the strong rallies of their local currency. However, he mentioned that their country does not have the option to “engineer a lower exchange rate”, thus easing traders fears of currency intervention.

New Zealand’s economic schedule is empty for today but the NZDUSD’s movement could be largely affected by data from the US. CB consumer confidence and S&P house price index are due today and both are expected to post improvements from their prior readings. Maybe this could bring risk appetite back in the markets and push the NZDUSD higher. We’ll see…

Investors snobbed the Kiwi’s 2.5% charm as they remain tentative in the global capitals markets. The NZDUSD pair fell to a low of 0.7415 before closing at 0.7442.

No economic reports were due in New Zealand yesterday. Though, the drop in the US’s CB consumer confidence index placed more downward pressure on the higher yielding currencies such as the NZD. The index surprisingly dropped to 47.7 from 53.4. Such drop led investors to favor the dollar again over the “cooler but riskier” assets.

Today, the National Bank of New Zealand will publish its latest business confidence index. The index logged in a score of 49.1 in September. A considerable increase in the figure could increase the probability that the RBNZ would hike its interest rate. However, the bank is widely expected to leave its interest rate unchanged at 2.5%. Still, some economists are speculating otherwise given the RBA’s recent hike. Will the RBNZ follow the RBA? We’ll find out today at 8:00 pm GMT.

And oh… a hike in the rates would propel the Kiwi higher. So you better keep at least an eye on it.

The NZD/USD pair took a major dive yesterday as Reserve Bank of New Zealand Governor Alan Bollard reiterated the bank’s commitment to keep rates steady well into 2010. The pair is currently trading just a few pips below 0.7200, right back to where it opened this month.

According to him, there is no urgency to change the bank’s accommodative stance with regards to monetary policy. The economy is still weak and far from its pre-recessionary state. It seems that the bank wants to make sure that recovery is certain before raising interest rates. Given this, will the NZD/USD be able to keep its status as the best-performing major currency pair in the foreign exchange market this year?

New Zealand’s trade balance released yesterday also mirrored this as it showed that imports slumped for the sixth straight month this September. The trade balance, which measures the net difference in value between imported and exported goods, printed -420 million, lower than the -675 million expected. The drop in imports was primarily led by the decline in demand for cars and computers.

Tonight, expect to see the report on Building Consents at 9:45 pm GMT. The report, which measures the increase (or decrease) of new building approvals month-on-month, is usually used by investors and traders as a leading indicator of future construction. Economists consider this essential as an increase in construction activity tends help labor market and therefore, consumer spending in the long run.

The Kiwi let out a sigh of relief, as they were able to avoid another day of losses in yesterdays trading. The NZD got a nice boost from risk appetite and the NZDUSD finished the day at 0.7328.

New Zealand building consents rose by 3.3% in September, marking the 5th time in 6 months that approvals rose. Some expect that this figure will continue to rise, as RBNZ decided this week not to raise their interest rates. The fellas over at the RBNZ decided to keep rates low in order to help stimulate the economy further, as they still feel that it needs more boosting.

No news coming out today from New Zealand, so be on the lookout for data that could be catalysts for shifts in sentiment. Yesterday, we saw risk appetite rise as a report showed that the US economy grew by 3.5% in the past quarter. With it being a Friday, it will be interesting to see what will happen – will risk aversion reign like it did most of the week, or will sentiment from yesterday carry over? Watch out and good luck trading!

The NZDUSD took a sharp dive last Friday as weak economic reports from the US caused a wave of risk aversion. No economic reports were released from New Zealand on that day but the surprise dip in Canada’s GDP may have hurt the CAD’s fellow com-dolls.

New Zealand will release its employment change report and unemployment rate in the middle of the week. Employment is expected to be down by 0.3% in the third quarter, which could bring the jobless rate from 6.0% up to 6.4%. Since no economic reports are due from New Zealand until Wednesday, the weak outlook for their labor market could drag the NZD down.

No other reports are due from New Zealand until the end of the week but the release of high-impact reports from the US could cause some wild swings in the NZDUSD pair. For today, the US has ISM manufacturing PMI and pending home sales data due. Better than expected figures could wipe out the USD’s gains last week and push the com-dolls higher. Let’s start the month with a bang, my forex friends!

The Kiwi rallied back yesterday against the dollar after falling sharply last week. The NZDUSD pair climbed to as high as 0.7260 before closing at 0.7179.

New Zealand’s calendar was report-free yesterday. The Kiwi, however, got a lift as the US capitals markets rallied due to a couple of better-than-expected economic data. The ISM manufacturing PMI printed a score of 55.7 over the 53.1 initial estimate. Pending home sales, which were widely seen to slow to 0.2% because of the expiration of the government’s tax subsidy to first-time home buyers, rose far more by 6.1%.

Earlier today, New Zealand’s labor cost index, which measures the change in the price businesses pay for labor minus overtime, rose by 0.4% during the third quarter. Despite coming a tad higher than last period’s 0.3% gain, the growth in wages is still deemed to be weak. Such suggests a still frail labor market which supports the NBNZ’s decision to keep its interest rate at a low level. In any case, the result gave the Kiwi some support.

The Kiwi, though, has been moving up already in tandem with the AUD as market participants anticipate the RBA’s rate hike which will be announced in couple of hours. The RBA is projected to rate its interest rate from 3.25% to 3.5%. Any hike in the rate could spill over and benefit the other higher yielding currencies such as the NZD.

Trading was mixed yesterday as the Kiwi initially fell during the European session but managed to fight back once the US session came rolling along.

  No significant economic data released yesterday but expect to see New Zealand’s employment report at 9:45 pm GMT today. The consensus among economists is that joblessness in the country worsened to 6.4% during the third quarter this year from 6.0% the quarter prior. Despite the predicted jump, experts say that the shedding of jobs is not yet over as they are expecting joblessness to peak at 7.0% sometime in 2010. In any case, if actual results of the report come out higher than anticipated, we could see the Kiwi drop in value. 

  Also lookout for the FOMC announcement at 7:15 pm GMT later on as it would probably be the primary determinant of the Kiwi’s price action. Risk aversion has been strong as of late and if we see the Fed take on a pessimistic stance with regards to the global economy, we might see another round of dollar buying.

The Kiwi experienced was able to get to step in and take advantage of the USD sell off yesterday. High yielders had a field day, which left the NZDUSD closing at 0.7263.

The gains however, were short lived as the NZD dropped once unemployment data was released late yesterday. The jobless rate rose to 6.5%, its highest level in 9 years. The kiwi dropped following the report, and as of this writing, is now trading just above 0.7400.

Take note that employment data normally lags behind. With New Zealand posting growth of 0.1% from June to September, we could see growth in unemployment slow down in coming months. Forecasts are now predicting that unemployment will peak off at 7.0%, as opposed to earlier predictions of 8.0%.

In a speech yesterday, Reserve Bank of New Zealand Governor Alan Bollard talked about key differences between Australia and New Zealand. While he said that Australia’s outlook looks brighter over the short term, he said that New Zealand could stand to benefit from them. He said that as Asian countries (ahem, China) look at Australia for investments, some of this good fortune could spill over onto New Zealand.

Nothing coming up for the rest of the week. Watch out for shifts in risk sentiment, especially with the Bank of England and European Central Bank releasing their interest rate decisions today.

With the lack of economic reports from New Zealand, the Kiwi zigzagged its way across the charts yesterday. At first, the NZDUSD staggered to a low of 0.7160 before crawling an intraday high of 0.7244. The pair then gave back most of its gains at the end of the day.

New Zealand’s economic schedule is report-free today but NZDUSD price action may be a little more exciting than yesterday’s now that we have the US NFP report on tap. The employment report is expected to print 173K in net job losses for October. A better than expected figure could spur risk appetite and provide more momentum for the Kiwi.

The Kiwi was able to close last Friday on a positive tone following its only taint for the week against the dollar. For last week, the NZDUSD pair fell to as low as 0.7084 before closing higher at 0.7139.

No economic reports were released in New Zealand last Friday. The NFP employment change in the US, however, came in worse than expected at -190,000 versus the -173,000 consensus. This pushed the jobless rate to a whopping 10.2%! Despite these dismal employment numbers, the US equities markets managed to close in the green territory which also brought the other “anti-dollars” higher as well.

This week’s economic calendar for the New Zealand is relatively light with only the release of the country’s financial stability report and retail sales for the month of October. New Zealand’s financial stability report will be made public on November 10. This report gives insights into the bank’s view of inflation, growth, and other factors which could possibly reflect on the bank’s future interest rates. Traders will be keen in watching this report given this purpose.

Meanwhile, data on the country’s retail sales for the month of September will be issued on November 11. Headline retail sales are seen to have advanced by 0.5% during the period after previously posting a 1.1% gain. The core figure is likewise projected to rise by 0.4% following a 1.2% expansion in the month prior. Additional gains in this sector echo a positive consumption in New Zealand. Such could then be bullish for the NZD.

Risk taking was back in full swing in the market yesterday as the Kiwi opened the Asian session almost 100 pips higher from its close last Friday. The Kiwi remained well supported throughout the day.

No data was released yesterday but expect to see the Reserve Bank of New Zealand financial stability report later at 8:00 pm GMT. This is a bi-yearly report wherein the bank gives its observations on New Zealand’s inflation, growth and possible future economic conditions. The key thing to watch out from the report is the Kiwi’s valuation. The RBNZ has been constantly saying how the Kiwi’s strength is posing a significant threat to recovery. If they talk down their currency again later, we might see the Kiwi give up some of yesterday’s gain.

There was some hesitance to bring the Kiwi higher yesterday, as traders left the NZDUSD stuck in the mud. Kiwi trading was tight, which left the pair to close at 0.7418, just a few pips from its opening for the day.

Late yesterday, the [Reserve Bank of New Zealand](http://www.babypips.com/forexpedia/Reserve_Bank_of_New_Zealand) released its financial stability report. According to RBNZ Governor [Alan Bollard](http://www.babypips.com/forexpedia/Alan_Bollard), the recent surge in the value of the NZD is unsustainable and posses a threat to New Zealand’s current account deficit. In addition, Bollard avoided talking about interest rates. As it is, the RBNZ’s base rates stands at 2.5%. Unlike their buddies at the RBA, Bollard and his crew have decided to keep rates at current levels, as they feel that overall conditions still remain weak and unstable. The report also revealed that the RBNZ has growing concerns regarding the state of bank lending. The central bank said that they wish to have tighter rules on bank capital ratios. 

Despite Bollard talking about the level of the NZD, it barely caused a ripple in Kiwi trading. Is this a sign that risk sentiment still has a hold on the market?

Today, we could see more movement for the NZDUSD, as September retail sales data will be available at 9:45 pm GMT. It is expected that sales rose by 0.5% during the month. If it comes in to show a nice surprise, we could see the NZD move higher once again.

The NZDUSD seemed resilient to weaker than expected retail sales data as it stayed in a tight trading range. The pair found support at the 0.7390 area but was unable to bust out of the resistance around 0.7440.

Retail sales edged up by 0.2% in September, coming in slightly below the consensus of a 0.5% rise. Increased appliances sales contributed much to the uptick in retail sales. Core retail sales, on the other hand, stayed flat.

New Zealand’s economic schedule is empty for today, leaving economic reports from the US as the main driver for the NZDUSD price action. The US has weekly unemployment claims and a speech by Treasury Secretary Timothy Geithner on tap. Also, US traders back from their Veterans Day holiday yesterday could usher in more volatility in the markets.

Renewed strength in the USD caused the NZDUSD pair to slip sharply in yesterday’s trading. After opening the week on a very promising note, the pair fell back to where it started. During the week, it went as high as 0.7462 before falling to a low of 0.7309.

No economic updates were scheduled in New Zealand yesterday. The NZD got off positively when Australia logged in a better-than-expected employment change at 24,500 (vs. -10,100). Shortly after that, things turned sour for the Kiwi for the most part of the day. Despite having the lowest unemployment claims in the US since January, the equities markets still dropped while USD advanced. The dollar index posted a 0.8% gain to end the session.

New Zealand will be report-free again today. The US, though, will publish its September trade balance and the preliminary UoM consumer sentiment for November. US’s trade deficit is seen to have expanded to -$31.8 billion from -$30.7 billion. The consumer sentiment, on the other hand, is projected to improve slightly to 71.1 from 70.6. Positive results from these accounts could benefit the Kiwi. Though, I cannot say for sure given yesterday’s “correlation break.”