NZD/USD – Kiwi at 12-month High After Lukewarm Yellen Speech

The New Zealand dollar has posted slight gains on Wednesday, continuing the upward trend we’ve seen this week. NZD/USD is trading at 0.7170 early in the North American session. On the release front, New Zealand Credit Card Spending posted a strong gain of 5.9%. The US will release Existing Home Sales, with the markets expecting the indicator to improve to 5.53 million. As well, Federal Reserve chair Janet Yellen will testify before the House Financial Services Committee regarding the Fed’s Monetary Policy Report. On Thursday, the US will release Unemployment Claims.

The New Zealand dollar has looked sharp in the month of June, climbing 5.9% in that time. NZD/USD is closing in on the 0.72 level and is currently trading at its highest level since June 2015. The New Zealand dollar has received a boost from solid New Zealand numbers, as GDP and Current Account both beating their estimates. As well, market sentiment that the UK will vote to remain in the EU has bolstered the New Zealand currency. The RBNZ next meets in August, and if economic indicators continue to perform well, the central bank may not have to lower interest rates.

Janet Yellen appeared before a Senate finance committee on Tuesday, and her testimony was cautious and tentative. Yellen acknowledged that the US economy could be stronger, saying that “[c]onsiderable uncertainty about the economic outlook remains”. As expected, Yellen provided no hints with regard to the timing of a rate hike, leaving the markets doubtful that we’ll see a rate hike in July. Yellen said she does not expect the US economy to enter a recession, but if such a scenario did occur, the US would not follow Japan and Europe and adopt negative interest rates. On a more positive note, Yellen said that weak oil prices, low interest rates and stronger wage growth should support consumer spending.

With just one day left until the Brexit referendum vote in the UK, the campaign between the “In” and “Out” camps is going down to the wire. Polls continue to predict a very close vote, but market sentiment is leading towards the UK staying within the EU. This sentiment has boosted the British pound in recent days against the dollar and the euro. Prime Minister David Cameron and other prominent British personalities have warned that a vote to leave the EU would damage the UK economy, while the “Leave” vote has tapped into voter dissatisfaction with Brussels, particularly concerning immigration. The “Leave” camp also claims that EU over-regulation has stifled British businesses, and point to countries such as Switzerland that have close economic relations with the EU but are not part of the bloc. Still, leaving the comfort zone of the EU would be a journey into the unknown, and analysts predict that if the UK exits the EU, the pound could dive by as much as 10 percent.

Tuesday (June 21)

  • 18:45 New Zealand Visitor Arrivals. Actual 0.1%
  • 23:00 New Zealand Credit Card Spending. Actual 5.9%

Wednesday (June 22)

  • 10:00 Federal Reserve Chair Janet Yellen Testifies
  • 10:00 US Existing Home Sales. Estimate 5.53M
  • 10:30 US Crude Oil Inventories. Estimate -1.3M

Upcoming Key Events

Thursday (June 23)

  • 8:30 US Unemployment Claims. Estimate 271K

*Key releases are highlighted in bold

*All release times are EDT

NZD/USD for Wednesday, June 22, 2016

NZD/USD June 22 at 8:35 EDT

Open: 0.7124 Low: 0.7118 High: 0.7178 Close: 0.7178

NZD/USD Technical

S3 S2 S1 R1 R2 R3
0.6897 0.7011 0.7100 0.7231 0.7319 0.7454
  • NZD/USD has posted gains in the Asian and European sessions
  • 0.7100 is a weak support line. It could see action in the North American session
  • There is resistance at 0.7231
  • Current range: 0.7100 to 0.7231

Further levels in both directions:

  • Below: 0.7100, 0.7011, and 0.6897
  • Above: 0.7231, 0.7319 and 0.7454

OANDA’s Open Positions Ratio

NZD/USD ratio is almost unchanged on Wednesday, despite gains by NZD/USD. Long positions command a majority (58%), indicative of trader bias towards NZD/USD continuing to move towards 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.