NZD/USD – New Zealand Dollar Lower, Markets Await NZ Central Bank Statement

NZD/USD has posted slight losses on Wednesday, as the pair trades at 0.6850 in the North American session. On the release front, New Zealand Trade Balance softened to NZ$117 million, well below the estimate of NZ$405 million. In the US, Pending Home Sales posted a strong gain of 1.7%, much higher than the estimate of 0.3%. Crude Oil Inventories climbed 2.0 million barrels, above expectations. Today’s highlight is the Federal Reserve policy statement, with the markets expecting no change to the current benchmark interest rate of 0.25%. On Thursday, the US releases two key events – Advance GDP and Unemployment Claims.

New Zealand’s trade surplus slipped in March, dropping to NZ$117 million, down from NZ$339 million a month earlier. This figure was well below the estimate, which stood at NZ$405 million. Weak global demand meant  a drop in New Zealand’s primary exports, including milk powder, beef and lamb. The markets will quickly shift their attention to the Royal Bank of New Zealand (RBNZ), which releases a rate statement later on Wednesday. In March, the central bank lowered the benchmark rate from 2.50% to 2.25%, surprising the markets which had expected no change. A second straight cut is unlikely, but a dovish statement from the RBNZ could weaken the New Zealand dollar.

All eyes are on the Federal Reserve, which will set the April benchmark rate and release a policy statement later on Wednesday. Will we see any monetary moves from the central banks? With the Fed widely expected to maintain interest rates at the current level of 0.25%, the markets will be carefully monitoring the tone of the policy statement. Janet Yellen has sounded cautious about the health of the US economy, and if the Fed continues on this path and sends out a dovish message, the dollar could soften against its major rivals.

US manufacturing indicators continue to post soft readings, indicative of a weak manufacturer sector that has lagged behind a strong US economy. Earlier this week, durable goods reports missed expectations. Core Durable Goods, a key indicator, dropped 0.2%, well off the estimate of a 0.6% gain. This marked the fourth decline in five months. Durable Goods Orders was stronger at 0.8%, but also missed expectations, as the estimate stood at 1.9%. Recent manufacturing reports, such as the Philly Fed Mfg. Index, have also been soft, as the industry has been hard-hit by weak global demand and a downturn in the US oil industry due to low crude prices.

NZD/USD Fundamentals

Tuesday (April 26)

  • 18:45 New Zealand Trade Balance. Estimate 405M. Actual 117M

Wednesday (April 27)

  • 8:30 US Goods Trade Balance. Estimate -62.5B. Actual -56.9B
  • 10:00 US Pending Home Sales. Estimate 0.3%. Actual 1.4%
  • 10:30 US Crude Oil Inventories. Estimate 1.4M. Actual 2.0M
  • 14:00 US FOMC Statement
  • 14:00 US Federal Funds Rate. Estimate <0.50%
  • 17:00 RBNZ Official Cash Rate. Estimate 2.25%
  • 17:00 RBNZ Rate Statement

Thursday (April 28)

  • 8:30 US Advance GDP. Estimate 0.7%.
  • 8:30 US Unemployment Claims. Estimate 258K

*Key releases are highlighted in bold

*All release times are EDT

NZD/USD for Wednesday, April 27, 2016

NZD/USD April 27 at 10:20 EDT

Open: 0.6890 Low: 0.6836 High: 0.6983 Close: 0.6855

NZD/USD Technical

S3 S2 S1 R1 R2 R3
0.6621 0.6738 0.6897 0.7011 0.7100 0.7231
  • NZD/USD has shown limited movement in the Asian and European sessions. The pair has posted slight losses in North American trade
  • 0.6897 is providing support
  • There is resistance at 0.7011

Further levels in both directions:

  • Below: 0.6897, 0.6738 and 0.6621
  • Above: 0.7011, 0.7100, 0.7231 and 0.7322
  • Current Range: 0.6897 to 0.7011

OANDA’s Open Positions Ratio

The NZD/USD is showing long positions with a strong majority (54%).This is indicative of trader bias towards NZD/USD reversing directions and moving to higher ground.

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.