NZD/USD – Surging Kiwi Punches Past 70

NZD/USD has posted gains on Tuesday, continuing the upward trend which marked the Monday session. The pair is trading at 0.7030 in the North American session. On the release front, US Building Permits and Housing Starts both posted sharp drops and missed expectations. The pair received a boost from the New Zealand GDT Price Index, which posted an impressive gain of 3.8%. On Wednesday, the US releases Existing Home Sales.

The New Zealand dollar has showed volatility since the weekend. USD/NZD briefly lost ground after the Doha meeting, which ended without an agreement. Expectations were high that oil producers would reach a deal to cap production levels, but these hopes were dashed when Saudi Arabia insisted that any agreement had to cover Iran. When this didn’t materialize, the participants, comprised of OPEC and non-OPEC members, went home. The failure of the talks could severely undermine the credibility of oil producers, and the huge oversupply of crude could worsen if Saudi Arabia and other suppliers decide to increase output. However, with oil prices stabilizing, investors have resumed purchasing commodity currencies like the kiwi, with NZD/USD jumping 2.2 percent since the weekend. The pair pushed above the symbolic 70 level on Tuesday, its highest level since June 2015.

New Zealand CPI, which is released on a quarterly basis, rebounded in the first quarter with a small gain of 0.2%. This edged above the forecast of 0.1% and was a strong improvement over the fourth quarter reading of -0.5%. The positive reading helped the New Zealand dollar recover after starting Monday’s Asian session with losses. The New Zealand central bank has been under some pressure to lower rates due to weak inflation levels, so this positive CPI reading affords the central bank some breathing room in this regard.

The US economy continues to perform well despite some weak sectors, such as the manufacturing industry. US manufacturers continue to face stiff competition with countries that pay much lower wages, such as China, India, and other Asian countries. With turbulent global economic conditions leading to weaker demand, the manufacturing sector is facing additional challenges. There was some positive news on Friday, as the Empire State Manufacturing Index climbed 9.6 points in April, crushing the estimate of 2.1 points. It was the indicator’s highest level since January 2015. We’ll get a look at the Philly Fed Manufacturing Index, a key manufacturing report, on Thursday. Meanwhile, the UoM Consumer Sentiment dropped to 89.7 points in April, short of the estimate of 91.9 points. Although consumer sentiment remains high, this marked the first time since September that the indicator fell below the symbolic 90 level.

NZD/USD Fundamentals

Tuesday (April 19)

• 8:30 US Building Permits. Estimate 1.20M. Actual 1.09M
• 8:30 US Housing Starts. Estimate 1.17M. Actual 1.09M
• 10:11 New Zealand GDT Price Index. Actual 3.8%

Upcoming Key Events

Wednesday (April 20)

• 14:00 US Existing Home Sales. Estimate 5.29M

*Key releases are highlighted in bold

*All release times are DST

NZD/USD for Tuesday, April 19, 2016

NZD/USD April 19 at 10:25 DST

Open: 0.6979 Low: 0.6963 High: 0.7054 Close: 0.7029

NZD/USD Technical

• NZD/USD posted gains in the Asian and European sessions. The pair is steady in North American trade.
• There is resistance at the round number of 0.7100
• 0.7011 remains fluid and has switched to a support line following gains by NZD/USD

Further levels in both directions:

• Below: 0.7011, 0.6897 and 0.6738
• Above: 0.7100, 0.7231 and 0.7322
• Current Range: 0.7011 to 0.7100

OANDA’s Open Positions Ratio

The NZD/USD ratio is showing strong movement towards long positions on Tuesday. Long and short positions are close to an even split, indicative of a lack of trader bias as to what direction NZD/USD 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.