NZD/USD – NZ Inflation Expectations Steady, Markets Await US Consumer Inflation

NZD/USD continues to struggle, as the pair trades just below the 0.65 line in Tuesday’s European session. In economic news, New Zealand Inflation Expectations remained unchanged at 1.9%. Later on Tuesday, New Zealand releases the Global Dairy Trade Price Index, with the markets hoping for a rebound after two sharp declines. In the US, CPI and Core CPI are today’s market-movers. On Wednesday, the Federal Reserve will release the minutes of its October policy meeting, and the markets will be keenly interested in the comments of policymakers regarding a rate hike.

US releases started off the week on the wrong foot, as the Empire State Manufacturing Index came in at -10.7 points in November, its fourth consecutive decline. This points to continuing weakness in the US manufacturing sector, which has struggled despite a stronger US economy. Meanwhile, the Fed watch continues, as speculation has increased that the Federal Reserve will begin a series of rate hikes, commencing in December. Fed Chair Janet Yellen has called the December meeting a “live possibility” of a rate hike. With the US economy close to full employment and many economic indicators pointing upwards, one of the last pieces in the puzzle is consumer inflation, which will be released later on Tuesday. The October CPI and Core CPI reports could play a crucial factor in determining whether the Fed makes a move and raises rates next month, and should be treated by traders as market-movers. Strong CPI readings could win over Fed policymakers who are concerned about whether the economy is strong enough to withstand a rate hike, while figures below the forecast would dampen expectations of a rate move before 2016. Traders should be prepared for volatility after the CPI releases.

NZD/USD Fundamentals

Tuesday (Nov. 17)

• 2:00 New Zealand Inflation Expectations. Actual 1.9%
• 13:30 US CPI. Estimate 0.2%
• 13:30 US Core CPI. Estimate 0.2%
• 14:15 US Capacity Utilization Rate. Estimate 77.5%
• 14:15 US Industrial Production. Estimate 0.1%
• 15:00 US Mortgage Delinquencies
• 15:00 US NAHB Housing Market Index. Estimate 64 points
• 21:00 US TIC Long-Term Purchases
• Tentative – New Zealand GDT Price Index

Upcoming Key Events

Wednesday (Nov. 18)

• 13:30 US Building Permits. Estimate 1.15M 
• 19:00 US FOMC Meeting Minutes

*Key releases are highlighted in bold

*All release times are GMT

NZD/USD for Tuesday, November 17, 2015

NZD/USD November 17 at 12:25 GMT

NZD/USD 0.6492 H: 0.6543 L: 0.6469

NZD/USD Technical

• NZD/USD posted slight losses in the Asian session but has recovered in the European session.
• 0.6605 is an immediate resistance line.
• 0.6449 is providing weak support.
• Current range: 0.6449 to 0.6605

Further levels in both directions:

• Below: 0.6449, 0.6368 and 0.6233
• Above: 0.6605, 0.6738 and 0.6897

OANDA’s Open Positions Ratio

NZD/USD ratio is unchanged on Tuesday, reflective of the lack of movement from the pair. The ratio remains close to a split between long and short positions (52:48), indicative of a lack of trader bias as to what direction the pair will take next.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.