NZD/USD Fundamental Analysis October 3, 2012, Forecasts
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The single biggest influence on the NZD/USD is likely to be demand for higher risk assets. This decision will be controlled by whether Spain makes a formal request to the European Central Bank for financial aid or the outcome of the ADP Non-Farm Employment Change report.
On Wednesday ADP releases its assessment of the U.S. jobs picture. This report will give investors a heads up on what to expect from Friday’s U.S. Non-Farm Payrolls report. If the number is bullish then demand for higher risk will rise, pressuring the U.S. Dollar. This will give the New Zealand Dollar a boost. If the report shows weakness then look for the NZD/CAD to weaken.
Another factor that may drive up the New Zealand Dollar will be demand for higher risk assets fueled by a formal request from Spain to the European Central Bank for financial aid. Traders are waiting for this to take place and it could trigger a sharp rise in global equity markets and commodities. Since interest rates in New Zealand are higher than rates in the U.S., investors may buy the currency pair in an effort to capture the better yield.
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James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.
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