NZD/USD Fundamental Forecast – August 25, 2016

The New Zealand Dollar traded mostly lower on Wednesday after giving back most of its gains from the previous day during a sell-off into the close. Some of the bigger players took advantage of the thin trading conditions to drive the Kiwi into its highest level since May 2015 after Reserve Bank of New Zealand governor Graeme Wheeler said the central bank would slow down the rate of interest rate cuts, before booking profits. The move helped wipe out over half of the market’s intraday gains.

Wednesday’s price action suggests that traders are hedging their positions on speculation Federal Reserve Chair Yellen may reiterate recent hawkish statements from a few high ranking Fed officials. Yellen’s speech at the Jackson Hole retreat for central bankers on Friday has come into sharper focus after Fed Vice-Chair Stanley Fischer said over the week-end that a 2016 rate hike was still under consideration and that measures of employment and productivity in the US economy were close to meeting the Fed’s goals.

Earlier on Wednesday, trader hardly flinched after figures showed New Zealand’s merchandise trade deficit narrowed to $433 million in July from the same month last year as imports such as crude oil fell faster than exports such as milk powder and meat.

The New Zealand Dollar looks very attractive to foreign investors seeking higher yields, but if Yellen fails to set a hawkish tone, it could rise in the short-term to .7350. On Wednesday, it was trading at .7296, up 0.0008 or 0.12%.

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, August 25, 2016

Government Bond Auctions

Date/Time Country Type

Aug 24 10:03 Sweden Holds bond auction

Aug 24 10:30 Germany Eur 4bn 0% Oct 2021 Bobl

Aug 24 18:00 US Holds 2yr FRN auction & 5yr note auction

Aug 25 18:00 US Holds 7yr note auction

Aug 26 10:10 Italy Holds zero coupon