The New Zealand dollar has posted slight gains on Tuesday, as the pair trades slightly above the 0.71 line in the North American session. On the release front, New Zealand will release Visitor Arrivals and Credit Card Spending. In the US, there are no economic releases for a second straight day. The markets will be listening closely to Federal Reserve Chair Janet Yellen,who will appear before the Senate Banking Committee and answer questions about the Fed’s Monetary Policy Report.
Is the United Kingdom In or Out? That is the burning question facing millions of Britons, who will go to the polls on Thursday, as the UK votes in a historic referendum on whether to remain in the EU. The campaign between the “In” and “Out” camps will go down to the wire, as polls predict a close vote. The British pound, which has become a barometer of the vote, has posted gains against the US dollar and the yen on Tuesday, bolstered by recent polls which show the “In” camp with a slight lead. Prime Minister David Cameron and prominent business leaders have warned that that a vote to leave the EU would hurt the UK economy, and a recent Treasury report says an EU exit will wipe out 800,000 jobs in the UK and cause a recession. The “Out” camp counters that EU over-regulation has stifled British businesses, and point to countries such as Switzerland that have close economic relations with the EU but are not part of the bloc. Still, leaving the comfort zone of the EU would be a journey into the unknown, and analysts predict that if the UK exits the EU, the pound could dive by as much as 10 percent.
With the Fed opting to stand pat again in June, the markets are speculating on the timing of another rate hike. In the heady days of December when the Fed raised interest rates, there was talk of up to four hikes in 2016. Fast forward to June, and the Fed hasn’t made a move so far this year. Many analysts are predicting only one hike in 2016, but on Friday, St. Louis Fed President James Bullard said that the economy may need just one hike in the next 2-1/2 years. Bullard did not mince words, bluntly stating that the Fed had done a poor job in its predictions about the US economy, and said the markets have no faith in the Fed’s “dot plot” of projected interest rate policy, as the Fed’s actual pace of rate hikes was much slower than its projections. Bullard added that this “mismatch” between words and action had caused distortions in the global financial markets and eroded credibility in the Federal Reserve.
Tuesday (June 21)
- 10:00 Federal Reserve Chair Janet Yellen Testifies
- 14:30 US FOMC Member Jerome Powell Speaks
- 18:45 New Zealand Visitor Arrivals
- 23:00 New Zealand Credit Card Spending
*Key releases are highlighted in bold
*All release times are EDT
NZD/USD for Tuesday, June 21, 2016
NZD/USD June 21 at 11:05 EDT
Open: 0.7111 Low: 0.7103 High: 0.7169 Close: 0.7134
- NZD/USD was flat in the Asian session and posted gains in European trade. The pair is steady in the North American session
- 0.7100 is a weak support line. It could see action in the North American session
- There is resistance at 0.7231
- Current range: 0.7100 to 0.7231
Further levels in both directions:
- Below: 0.7100, 0.7011, and 0.6897
- Above: 0.7231, 0.7319 and 0.7454
OANDA’s Open Positions Ratio
NZD/USD ratio has shown gains in short positions on Tuesday. Long positions command a majority (57%), indicative of trader bias towards NZD/USD continuing to move towards higher 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.