NZD/USD – New Zealand Surges As RBNZ Holds Rates

NZD/USD is unchanged on Thursday, following sharp gains in the Wednesday session after the RBNZ maintained interest rates. The pair is trading slightly above the 0.71 line in the North American session. On the release front, there are no New Zealand events on the schedule. Over in the US, Unemployment Claims dipped to 264 thousand, beating expectations. On Friday, the US will release UoM Consumer Sentiment, with the indicator expected to dip to 94.1 points.

The New Zealand dollar surged on Wednesday, gaining 170 points. NZD/USD is currently trading above the 0.71 line. This is unfamiliar territory for the pair, which last reached the 0.71 level in June 2015. The kiwi jumped after the RBNZ surprised the markets and held the benchmark rate at 2.25%. The markets had widely expected that the central bank would lower rates by a quarter point, to 2.00%. Speaking after the rate decision, RBNZ Governor Graeme Wheeler defended the decision, noting that inflation rates are expecting to rise and the housing market remains very tight. The RBNZ has been reluctant to lower rates, since such a move could further heat up the housing market and hurt the economy.

Last week’s Nonfarm Payrolls of just 38,000 new jobs shocked the markets and sent the US dollar tumbling. A couple of minor employment indicators were soft, leading to some concern about the strength of the US labor market. However, these concerns should be laid to rest after key job numbers this week were solid and beat expectations. On Wednesday, JOLTS Job Openings improved to 5.79 million, easily beating the forecast of 5.67 million. Unemployment Claims followed suit with a strong reading. The indicator dropped to 264 thousand, compared to an estimate of 269 thousand. Significantly, this marked the lowest jobless report in six weeks. With the Federal Reserve mulling over a rate hike in the next few months, employment numbers will be especially significant, and any unexpected reading could result in volatility in the currency markets.

NZD/USD Fundamentals

Wednesday (June 8)

• 17:00 New Zealand Official Cash Rate. Estimate 2.00%. Actual 2.25%
• 17:00 New Zealand RBNZ Rate Statement
• 17:00 New Zealand Monetary Policy Statement
• 17:00 RBNZ Press Conference
• 21:10 RBNZ Governor Graeme Wheeler Speaks

Thursday (June 9)

• 8:30 US Unemployment Claims. Estimate 269K. Actual 264K
• 10:00 US Wholesale Inventories. Estimate 0.1%. Actual 0.6%
• 10:30 US Natural Gas Storage. Estimate 80B. Actual 65B
• 13:01 US 30-year Bond Auction

Upcoming Key Events

Friday (June 10)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 94.1 points

*Key releases are highlighted in bold

*All release times are EDT

NZD/USD for Thursday, June 9, 2016

NZD/USD June 9 at 12:10 EDT

Open: 0.7121 Low: 0.7090 High: 0.7148 Close: 0.7126

NZD/USD Technical

• NZD/USD has showed limited movement in the Thursday session. The pair broke through two resistance lines on Wednesday after posting sharp gains
• 0.7100 is a weak support line
• 0.7231 is a strong resistance line

Further levels in both directions:

• Below: 0.7100, 0.7011 and 0.6897
• Above: 0.7231, 0.7319 and 0.7461
• Current Range: 0.7100 to 0.7231

OANDA’s Open Positions Ratio

The NZD/USD ratio is showing movement towards short positions on Thursday. This is consistent with the strong gains posted by NZD/USD on Wednesday, covering long positions. Short positions have a strong majority (60%), which is indicative of trader bias towards NZD/USD reversing directions and moving to lower levels.

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.