NZD/USD Fundamental Forecast – April 28, 2016

The NZD/USD fell in sympathy with the Australian Dollar after the release of a weaker-than-expected Australian consumer inflation report. The Kiwi finished at 0.6873, down 0.0024 or -0.35%.

Earlier today, Australia reported its first quarterly decline in inflation in more than seven years. The consumer price index fell 0.2 percent in the three months to March, the first fall since the first quarter of 2008. That brought Australia’s annual inflation rate to 1.3 percent, well below the Reserve Bank’s target of 2 to 3 percent, which increases the chances of a Reserve Bank of Australia interest rate cut.

Volume was a little light as investors remained cautious ahead of monetary policy statements and interest rate decisions by the U.S. Federal Reserve, the Reserve Bank of New Zealand and the Bank of Japan this week.

On Tuesday, the U.S. Federal Open Market Committee kicked off its two-day meeting and is scheduled to release its statement on monetary policy Wednesday afternoon at 2:00 pm ET. The central bank is widely expected to leave interest rates unchanged, but investors will be eyeing its monetary policy statement for clues on the timing of the next rate hike.

Traders are pricing in a 55 percent chance Reserve Bank Governor Graeme Wheeler will cut the official cash rate to 2 percent on Thursday to try to spur inflation back within his 1-percent to 3-percent target band.

Look for the NZD/USD to fall further if the Fed’s monetary policy statement contains strong language that suggests a possible rate hike in June. If the Fed is dovish then the Kiwi may rally, but gains will be limited by the thought of a possible rate hike by the RBNZ. The Kiwi could strengthen further if the central bank refrains from cutting rates.

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.

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Thursday, April 28, 2016

Government Bond Auctions

Date Time       Country           Auction

Apr 27 11:03 Sweden Holds bond auction

Apr 27 11:10 Italy Holds CTZ auction

Apr 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Apr 27 19:00 US 2-year FRN, 5-year note auctions

Apr 28 11:10 Italy Holds 5yr/10yr bond auctions

Apr 28 19:00 US Holds 7-year note auction