NZD/USD Fundamental Forecast – August 1, 2016

The NZD/USD is up 42 points this morning at 0.7113 as commodity currencies continued to gain as the US dollar eased in the morning session. The US dollar is down 37 points offsetting the climb of the kiwi. The greenback is trading at 96.33. The Bank of Japan policy review follows one from the Federal Reserve, which said near-term risks to the US economic outlook had diminished and the labour market had improved, suggesting it will raise rates later this year. Still, markets took the message that the Fed isn’t in a rush to hike rates, which meant the kiwi dollar remained well supported, with expectations that New Zealand’s looming rate cuts won’t be deep enough to diminish the appeal of the yield on offer.

After little growth in recent months, official Statistics New Zealand figures show permits rose a seasonally adjusted 16 percent in June compared with May.

A total of 2752 new homes were consented last month, up 35 percent from the same period a year ago, including 1863 new stand-alone houses.

ASB senior economist Jane Turner said the strong June figures provided some relief.

“The trend in residential consent issuance growth had been slowing over the first half of the 2016. However, the lift in June consents is an encouraging sign that building demand is continuing to grow,” Ms Turner said.

Annual housing consents hit their highest level in over a decade. “The annual total of 29,097 is the highest for a June year since 2004, when it was more than 33,000,” Statistics New Zealand business indicators manager Clara Weatherly said.

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Upcoming Economic Events that you should be monitoring:

Monday, August 1, 2016

Government Bond Auctions

Date/Time Country Type

Aug 2   JPY                  10-Year JGB Auction                          -0.243%

Aug 2   USD                4-Week Bill Auction                           0.270%