NZD/USD has posted considerable gains on Monday, as the pair trades at 0.6735 in the North American session. On the release front, US Core PCE Price Index and Personal Spending both posted small gains of 0.1 percent, within expectations. Later in the day, the US releases Pending Home Sales, with the markets expecting a strong gain of 1.2 percent. There are no New Zealand releases on Monday. On Tuesday, the US releases CB Consumer Confidence, and Janet Yellen will deliver remarks at a meeting in New York.
The US economy continues to expand but has slowed down. Final GDP posted a gain of 1.4 percent in the fourth quarter, supported by a climb in household spending, a key driver of economic growth. This figure beat the estimate of 1.0 percent, but was lower than the 2.0 percent gain in Q3. With the global slowdown taking a bite out of US exports, strong consumer spending has been the engine behind the economy’s growth. The economy grew at a pace of 2.0 percent in 2015, identical to the figure of 2014. What can we expect for the first quarter of 2016? The financial markets were in turmoil in the early weeks of the year, so GDP in Q1 will be hard-pressed to post similar numbers.
US durable numbers declined in February, indicative of a struggling manufacturing sector. Core Durable Goods Orders posted a decline of 1.0%, well short of the forecast of a 0.2% drop. This marked the indicator’s third decline in four months. Durable Goods Orders was even worse, with a reading of -2.8%, slightly above the estimate of -3.0%. This slowdown is reflective of weak global demand, which has had a strong negative impact on the manufacturing sectors of developed economies worldwide, including the US.
A flurry of hawkish statements from Federal Reserve members last week resulted in broad gains for the dollar, which gained close to 100 points last week against the New Zealand dollar. After a dovish policy statement from the Fed, a market hike did not seem likely until before June. The markets have quickly changed this assessment after some Fed officials called for an April hike. Fed chair Janet Yellen will make a speech in New York on Tuesday, and the US dollar could jump if Yellen does not rule out an April move.
Monday (March 28)
- 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.1%
- 8:30 US Personal Spending. Estimate 0.2%.; Actual 0.1%
- 8:30 US Goods Trade Balance. Estimate -62.3B
- 8:30 US Personal Income. Estimate 0.1%. Actual 0.2%
- 10:00 US Pending Home Sales. Estimate 1.2%
Upcoming Key Events
Tuesday (March 29)
- 10:00 US CB Consumer Confidence. Estimate 93.9 points
*Key releases are highlighted in bold
*All release times are DST
NZD/USD for Monday, March 28, 2016
NZD/USD March 28 at 9:50 DST
Open: 0.6675 Low: 0.6665 High: 0.6735 Close: 0.6734
- NZD/USD was uneventful in the Asian and European sessions. The pair has posted gains in North American trade
- 0.6738 is under strong pressure as resistance. It could break during the North American session
- 0.6605 is providing strong support
Further levels in both directions:
- Below: 0.6605, 0.6449 and 0.6344
- Above: 0.6738, 0.6897, 0.7011 and 0.7100
- Current Range: 0.6605 to 0.6738
OANDA’s Open Positions Ratio
The NZD/USD ratio is showing long positions with a strong majority (59%). This is indicative of trader bias towards the pair moving to higher levels.