NZD/USD – Kiwi Rallies on Strong New Zealand Numbers, Weak US PMI

NZD/USD continues to climb on Tuesday, as the pair trades at 0.6670 in the North American session. In economic news, New Zealand GDT Price Index rebounded with a strong gain of 3.6%. In the US, ISM Manufacturing PMI disappointed with a reading of 48.6 points.

The New Zealand dollar has gained about 150 points this week, buoyed by strong numbers out of New Zealand. The week kicked off with an excellent reading from ANZ Business Confidence, which jumped to 10.6 points. This marked a six-month high and points to strong business confidence in the economy. This was followed by the GDT Price Index, which broke a nasty streak of three straight declines, posting a gain of 3.6%. The kiwi responded with sharp gains, as NZD/USD is trading at four-week highs.

US manufacturing data has not impressed in recent readings, and this was underlined by a soft reading from ISM Manufacturing PMI. The key index slipped to 48.6 points in November. This figure fell short of the estimate of 50.6 points, and marked the first contraction from the index since May 2013. Manufacturing data in October was also soft – the Empire State Manufacturing Index posted a dismal reading of -10.7 points, worse than the estimate of -5.3 points. This marked a fourth straight decline by the important indicator. As well, Philly Fed Manufacturing Index posted a weak gain of 1.9 points. This negative trend points to trouble in the manufacturing sector, and could weigh on the US dollar.

With the US economy generally producing strong data, in particular employment numbers, speculation has increased that the Federal Reserve will change course and raise interest rates for the first time in ten years. Unemployment Claims were down sharply last week, and even a lukewarm Nonfarm Payroll report later in the week is unlikely to present an obstacle for the Fed. At the same time, there is a serious concern over low inflation levels, as the Fed has noted in the past that inflation is an important factor in the rate decision process. We’ll get a look at one more round of CPI and PPI reports prior to the Fed policy meeting on December 16, and these releases could cause some volatility in the markets if they are not close to the estimates. Meanwhile, the guessing game continues, and the markets will be closely following every key release and comments from Fed members in the two weeks leading up to the critical December policy meeting.

NZD/USD Fundamentals

Monday (Nov. 30)

• 00:00 New Zealand ANZ Business Confidence. Estimate 14.6 points

Tuesday (Dec. 1)

• 14:24 New Zealand GDT Price Index. Actual 3.6%
• 14:45 US Final Manufacturing PMI. Estimate 52.6 points. Actual 52.8 points
• 15:00 US ISM Manufacturing PMI. Estimate 50.6 points. Actual 48.6 points
• 15:00 US Construction Spending. Estimate 0.5%. Actual 1.0%
• 15:00 US ISM Manufacturing Prices. Estimate 40.0 points. Actual 35.5 points
• All Day – Total Vehicles Sales. Estimate 18.0M
• 16:45 US FOMC Member Charles Evans Speaks

Upcoming Key Events

Wednesday (Dec. 2)

• 13:15 ADP Nonfarm Employment Change. Estimate 191K
• 17:25 Fed Chair Janet Yellen Speaks

*Key releases are highlighted in bold

*All release times are GMT

NZD/USD for Tuesday, December 1, 2015

NZD/USD December 1 at 14:45 GMT

NZD/USD 0.6679 H: 0.6680 L: 0.6591

NZD/USD Technical

• NZD/USD has shown strong gains throughout the day.
• 0.6738 is providing resistance and could see pressure during the North American session.
• 0.6605 has strengthened in support as the pair trades at higher levels.
• Current range: 0.6605 to 0.6738

Further levels in both directions:

• Below: 0.6605, 0.6449, 0.6368 and 0.6233
• Above: 0.6738, 0.6897 and 0.70

OANDA’s Open Positions Ratio

NZD/USD ratio is showing a small majority for short positions (52%). This is indicative of very slight trader bias towards the pair losing 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.