NZD/USD – New Zealand Dollar Slips Close to 67 Line

NZD/USD has posted slight losses on Tuesday, as the pair trades slightly above the 0.67 line in the European session. In economic news, New Zealand will release the GDT Price Index, a key event. There is one minor event out of the US today, Total Vehicle Sales.

The New Zealand dollar has headed south early in the New Year, losing over 100 points this week. NZD/USD has mimicked the movement of AUD/USD, which has also suffered sharp losses this week. Investors have dumped the risky kiwi in favor of the safety haven of the US dollar, following the release of weak Chinese manufacturing data, which has underscored the slowdown affecting the world’s second largest economy. The sharp drop was largely due to a disappointing reading from Chinese Caixin Manufacturing PMI. The key indicator, slipped to 48.2 points in December, short of the forecast of 48.9 points. The index managed to break above the 50-point level only once in 2015, pointing to ongoing contraction in the Chinese manufacturing sector. As well, another crisis in the Middle East is brewing, as Saudi Arabia abruptly cut off relations with Iran following the execution of a Saudi cleric which led to the ransacking of the Saudi embassy in Tehran.

The US economy showed strong improvement in 2015 and received a vote of confidence from the Federal Reserve, which raised interest rates just before the end of the year. At the same time, certain sectors have lagged behind the recovery, such as the manufacturing industry. Recent manufacturing releases have missed expectations, and the negative trend continued on Monday. ISM Manufacturing PMI, a key indicator, slipped to 48.2 points, well short of the forecast of 49.1 points. This weak reading is raising concerns, since it marks back-to back releases below the 50-point level, which separates expansion from contraction. It is also the sixth consecutive month that the PMI has softened. As well, ISM Manufacturing Prices dipped to 33.5 points, well below expectations.

NZD/USD Fundamentals

Tuesday (Jan. 5)

  • Tentative – New Zealand GDT Price Index
  • All Day – US Total Vehicle Sales. Estimate 18.1M

*Key releases are highlighted in bold

*All release times are GMT

NZD/USD for Tuesday, January 5, 2016

NZD/USD January 5 at 12:55 GMT

NZD/USD 0.6744 H: 0.6832 L: 0.6736

NZD/USD Technical

S3 S2 S1 R1 R2 R3
0.6449 0.6605 0.6738 0.6897 0.70 0.7128
  • NZD/USD posted sharp losses in the Asian session and has been choppy in European trade.
  • 0.6738 is a weak support level and remains under strong pressure. It could break during the North American session.
  • There is resistance at 0.6897
  • Current range: 0.6738 to 0.6897

Further levels in both directions:

  • Below: 0.6738, 0.6605, 0.6449 and 0.6368
  • Above: 0.6897, 0.70, and 0.7128

OANDA’s Open Positions Ratio

NZD/USD ratio is unchanged, showing a majority of short positions (55%). This is indicative of trader bias towards the pair continuing to move 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.

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.