NZD/USD – New Zealand Dollar Rebounds With Gains

NZD/USD has posted gains on Monday, as the pair trades at 0.6560 in the North American session. On the release front, it’s a subdued start to the week. New Zealand Building Consents softened, posting a gain of 1.8%. Later in the day, New Zealand releases ANZ Commodity Prices. In the US, the Labor Market Conditions Index surged to 2.9 points.

It was a week to forget for the New Zealand dollar, which gave up almost 300 points against the US dollar. The currency mimicked the movement of other minor currencies, such as the Australian and Singapore dollars, which also suffered sharp losses last week. Clearly, investors were in a hurry to abandon the kiwi in favor of the safe-haven US dollar. The New Year started with investors seeking the safety of the US dollar following weak Chinese manufacturing data which underscored the slowdown affecting the world’s second largest economy. Rising tensions between Saudi Arabia and Iran and a surprise nuclear device test by North Korea further decreased any appetite for risk. The kiwi received another blow after China devalued its currency, the yuan, by over 0.5%. This move has led to sharp declines on the global stock markets and further dampened any enthusiasm for risky currencies like the New Zealand dollar.

The first trading week of 2016 ended on a high note, as US Nonfarm Payrolls surged to 292 thousand, crushing the estimate of 203 thousand. This was the strongest reading in 10 months, and underscores a strong US employment market. The unemployment rate remained unchanged at 5.0 percent. The Fed will probably not make another move at its policy meeting at the end of January, so soon after the historic rate hike in December. However, many experts are expecting that the Fed will raise interest rates in March. Such a move would likely make the US dollar assets more attractive to investors and boost the greenback against its rivals. If the US economy continues to heat up, the Fed is expected to continue to tighten monetary policy over the course of 2016.

The Federal Reserve released the minutes of its historic December policy meeting, at which it raised rates by 0.25 percent. The minutes were noteworthy in highlighting differences among policymakers as to whether US inflation levels will improve. Indeed, some FOMC members said that their vote in favor of a rate hike was a close call because of concerns that low inflation levels will continue in 2016. What’s next? The Fed has hinted that the December rate hike was the first of a series of incremental moves in 2016, but inflation levels will play an important role in the timing and size of future rate hikes.

NZD/USD Fundamentals

Sunday (Jan. 10)

• 16:45 New Zealand Building Consents. Actual 1.8%

Monday (Jan. 12)

• 10:00 US Labor Market Conditions Index
• 19:00 New Zealand ANZ Commodity Prices

*Key releases are highlighted in bold

*All release times are EST

NZD/USD for Monday, January 11, 2016

NZD/USD January 11 at 15:15 GMT

NZD/USD  Open: 0.6516 Low: 0.6510 High: 0.6579 Close: 0.6562

NZD/USD Technical

• NZD/USD was flat for most of the Asian session and has posted slight gains in European trade. The pair is unchanged in the North American session.
• There is weak resistance at 0.6605
• 0.6449 is providing support
• Current range: 0.6449 to 0.6605

Further levels in both directions:

• Below: 0.6449, 0.6368 and 0.6233
• Above: 0.6605, 0.6738, 0.6897 and 0.70

OANDA’s Open Positions Ratio

In the NZD/USD ratio, short positions continue to retain a majority of open positions (53%). This is indicative of trader bias towards the pair 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.