NZD/USD – Kiwi Steady, US Existing Home Sales Next

NZD/USD is steady on Wednesday, as the pair is trading just above the 0.70 line early in the North American session. Taking a look at today’s economic events, the US will release Existing Home Sales and Crude Oil Inventories. Later in the day, New Zealand releases two minor indicators – Visitor Arrivals and Credit Card Spending.

US housing numbers disappointed on Tuesday. Building Permits, a key release, slipped to 1.09 million, its weakest level in 12 months. There was no relief from Housing Starts, which also fell to 1.09 million, well short of the estimate of 1.17 million. Although the labor market is close to full capacity and consumer confidence remains at high levels, the housing sector has not kept up. Another sore spot in the US economy is the manufacturing sector. Uncertainty in global economic conditions has lead to weaker demand for US goods and put the squeeze on domestic manufacturers. 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.

The New Zealand dollar has rallied since the weekend, gaining over 100 points. USD/NZD briefly lost ground after the Doha oil 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 recording losses in Monday’s Asian session. The New Zealand central bank has been under some pressure to lower interest rates due to weak inflation levels, so this positive CPI reading affords the central bank some breathing room in this regard. There was more good news from the New Zealand Dairy Auction, which posted an excellent gain of 3.8%. This was the strongest gain since October 2015.

NZD/USD Fundamentals

Wednesday (April 20)

  • 10:00 US Existing Home Sales. Estimate 5.29M
  • 10:30 US Crude Oil Inventories. Estimate 2.2M
  • 18:45 New Zealand Visitor Arrivals
  • 23:00 New Zealand Credit Card Spending

Upcoming Key Events

Thursday (April 21)

  • 8:30 US Philly Fed Manufacturing Index. Estimate 8.1 points
  • 8:30 US Unemployment Claims. Estimate 265K

*Key releases are highlighted in bold

*All release times are EDT

NZD/USD for Wednesday, April 20, 2016

NZD/USD April 20 at 8:20 EDT

Open: 0.7031 Low: 0.6992 High: 0.7038 Close: 0.7008

NZD/USD Technical

S3 S2 S1 R1 R2 R3
0.6621 0.6738 0.6897 0.7011 0.7100 0.7231
  • NZD/USD has shown limited movement in the Asian and European sessions
  • 0.6897 is providing support
  • 0.7011 remains fluid and is a weak resistance line. It could break during the North American session

Further levels in both directions:

  • Below: 0.6897, 0.6738 and 0.6621
  • Above: 0.7011, 0.7100, 0.7231 and 0.7322
  • Current Range: 0.7011 to 0.7100

OANDA’s Open Positions Ratio

The NZD/USD ratio is unchanged on Wednesday, consistent with the lack of movement from NZD/USD. Long and short positions remain 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.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.