NZD/USD Fundamental Forecast – February 8, 2016

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Updated: Feb 5, 2016, 05:54 UTC

Analysis and Recommendation: The NZD/USD fell 30 points to 0.6693 as the US dollar recovered in the morning session weakening as Australian retail sales

NZD/USD Fundamental Forecast – February 8, 2016

Analysis and Recommendation:

The NZD/USD fell 30 points to 0.6693 as the US dollar recovered in the morning session weakening as Australian retail sales tumbled giving cause to worry about the kiwi economy also. The stress over Chinese economic data has weighed on the export currencies.

The price for New Zealand’s key dairy product, whole milk powder, looks set to fall further, according to traders who are pricing in declines on the NZX futures market.

At this week’s fortnightly GlobalDairyTrade auction, the price for whole milk powder sank 10.4 percent to $1,952 a tonne, its lowest since Aug. 18 when it hit a record low $1,590 a tonne. Prices on the NZX futures market today show contracts for February through May are all trading below the last GDT level, ranging from $1,755-to-$1,880 a tonne, implying prices will fall. From June, the futures contracts step up above $2,000 a tonne.

The prospect of milk prices falling further will put more pressure on an already stretched dairy sector. DairyNZ, the industry body which collects data from farmers, estimates 85 percent of New Zealand dairy farmers will post a loss this season as prices take longer than expected to recover to sustainable levels. Global milk supply continues to outweigh demand, as an El Nino weather pattern seems not to have dented local production as much as previously forecast, and as European milk volumes increase.

Unlike Europe and the US, which have large domestic markets, New Zealand exports the majority of its product and is therefore more exposed to international price

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

Cur.	Event	Actual	Forecast	Previous
AUD	Retail Sales (MoM) (Dec)	0.0%	0.5%	0.4%
USD	Nonfarm Payrolls (Jan)		190K	292K
USD	Unemployment Rate (Jan)		5.0%	5.0%
CAD	Employment Change (Jan)		5.5K	22.8K
CAD	Ivey PMI (Jan)		50.0	49.9