NZD/USD – Wobbly Kiwi Below 65, US Jobless Claims Disappoint

The New Zealand dollar has posted slight losses on Thursday, as NZD/USD is trading at 0.65 in the North American session. In economic news, US Unemployment Claims climbed to 281 thousand, missing expectations. New Zealand will release the Food Price Index later in the day. On Friday, there are a host of key US releases, led by Retail Sales and PPI.

There hasn’t been much for the New Zealand dollar to cheer about in the New Year, as NZD/USD has plunged some 400 points in January. The pair has recorded six losing daily sessions in the past seven trading days. The kiwi joins other minor currencies, such as the Australian and Singapore dollars, which have experienced sharp drops following recent events in China, notably the Chinese stock market meltdown and the devaluation of the Chinese yuan. Geopolitical tensions in Korea, the Persian Gulf and Indonesia have also contributed to significant movement away from the risky New Zealand currency, bolstering the US dollar.

In a historic move, the Federal Reserve raised interest rates in December for the first time in nine years, and hinted that this move was the first of a series in 2016. Not surprisingly, this has led to intense market speculation as to when the Fed might strike again. A rate hike in late January is not seen as likely, coming so soon after the December move. Many experts are forecasting another hike in March, contingent on a strong US economy. Although the economy is in good shape, one major area of concern is the inflation picture. Inflation levels have not kept up with other economic indicators and remain at low levels. The minutes of the December meeting indicated that some Fed members strongly considered voting against a rate hike due to weak inflation. Another concern is a lack of wage growth, despite a robust labor market. This was underscored by the last Average Hourly Earnings report, which came in at a flat 0.0% in December. The Fed will be keeping a close eye on inflation and wage growth data before reaching a decision to raise rates again early in 2016.

NZD/USD Fundamentals

Thursday (Jan. 14)

• 8:30 US Unemployment Claims. Estimate 275K. Actual 281K
• 8:30 US FOMC James Bullard Speaks
• 8:30 US Import Prices. Estimate -1.4%. Actual -1.2%
• 10:30 US Natural Gas Storage. Estimate -152B
• 13:01 US 30-year Bond Auction
• 16:45 New Zealand Food and Price Index

Upcoming Key Events

Friday (Jan. 15)

• 8:30 US Core Retail Sales. Estimate 0.2%
• 8:30 US PPI. Estimate -0.2%
• 8:30 US Retail Sales. Estimate -0.1%
• 10:00 UoM Consumer Sentiment. Actual 92.7 points

*Key releases are highlighted in bold

*All release times are EST

NZD/USD for Thursday, January 14, 2016

NZD/USD January 14 at 8:50 GMT

Open: 0.6484 Low: 0.6419 High: 0.6507 Close: 0.6458

NZD/USD Technical

• NZD/USD was steady in the Asian session. The pair posted losses in the European session and has leveled in North American trade
• There is resistance at 0.6605
• 0.6449 was tested in support and is a weak line
• 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, 0.6897 and 0.70

OANDA’s Open Positions Ratio

The NZD/USD ratio is showing long and short positions close to an even split. This is indicative of a lack of trader bias as to which 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.