NZD/USD – Kiwi Climbs Higher, Markets Await US NFPs

NZD/USD continues to post gains and has punched above the 0.67 line on Thursday, trading at 0.6733 in the North American session. In economic news, US Unemployment Claims climbed for a second straight week, with a reading of 278 thousand. The ISM Non-Manufacturing PMI was almost unchanged, with a respectable reading of 53.4 points. This beat the forecast of 53.2 points. There are no New Zealand releases on Thursday.

It has been a good week for the New Zealand dollar, which has posted gains of 130 points against its US counterpart. New Zealand indicators have shown some strength, as the GDT Price Index posted a gain of 1.4%, ending a nasty streak of four straight gains. Despite, these gains, the dairy industry, a vital sector of the New Zealand economy, is struggling, as world dairy prices remain depressed due to an excess of supply. ANZ Commodity Prices rebounded and rose 0.4%, its highest gain since October 2015.  The indicator had registered three straight declines, underscoring weak global demand, which has taken a heavy toll on New Zealand’s exports.

US job reports are closely monitored by the markets, and a robust labor market in 2015 was a key reason that the Federal Reserve opted to raise rates in December. This year’s employment numbers have been mixed, and this has also been the trend so far this week. Unemployment Claims rose for a second straight week, rising to 278 thousand. Earlier in the week, ADP Nonfarm Payrolls improved to 214 thousand, crushing the estimate of 185 thousand. Will we see a repeat in the official Nonfarm Payrolls on Friday? A strong NFP release could revive speculation about a March rate hike by the Federal Reserve, although this scenario remains very unlikely. Meanwhile, there has been some improvement in the manufacturing sector, which has persistently posted poor numbers. Last week, durable goods reports sparkled, easily beating expectations. This was followed by ISM Manufacturing PMI, which improved to 49.5 points in January. Although the index is still contracting, this reading beat expectations and marked a four-month high. These readings have revived hopes that the worst is behind the manufacturing sector and that 2016 will bring better news to the beleaguered industry.

NZD/USD Fundamentals

Wednesday (March 2)

• 19:00 New Zealand ANZ Commodity Prices. Actual 0.4%

Thursday (March 3)

• 7:30 US Challenger Job Cuts. Actual 21.8%
• 8:30 US Unemployment Claims. Estimate 271K. Actual 278K
• 8:30 US Revised Nonfarm Productivity. Estimate -3.2%. Actual -2.2%
• 8:30 US Revised Unit Labor Costs. Estimate 4.8%. Actual 3.3%
• 9:45 US Final Services PMI. Estimate 49.8. Actual 49.7
• 10:00 US ISM Non-Manufacturing PMI. Estimate 53.2. Actual 53.4
• 10:30 US Factory Orders. Estimate 2.1%. Actual 1.6%
• 10:30 US Natural Gas Storage. Estimate -49B. Actual -48B

Friday (March 4)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 195K
• 8:30 US Unemployment Rate. Estimate 4.9%
• 8:30 US Trade Balance. Estimate -43.5B

*Key releases are highlighted in bold

*All release times are EST

NZD/USD for Thursday, March 3, 2016

NZD/USD March 3 at 11:15 EST

Open: 0.6661 Low: 0.6656 High: 0.6729 Close: 0.6733

NZD/USD Technical

• NZD/USD was flat in the Asian session. The pair posted gains in European trade and is steady in the North American session.
• 0.6738 is a weak resistance line
• 0.6605 is providing support

Further levels in both directions:

• Below: 0.6605, 0.6449, 0.6344 and 0.6233
• Above: 0.6738, 0.6897 and 0.7011

OANDA’s Open Positions Ratio

The NZD/USD ratio is showing short positions with a strong majority (58%). This is indicative of trader bias towards NZD/USD heading to lower 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.