NZD/USD Fundamental Forecast – May 2, 2016

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Published: Apr 29, 2016, 03:26 UTC

The NZD/USD gained 7 points to trade at 0.6969 and could break the 70 level in today’s session. The greenback turned lower in the morning session falling

NZD/USD Fundamental Forecast – May 2, 2016

The NZD/USD gained 7 points to trade at 0.6969 and could break the 70 level in today’s session. The greenback turned lower in the morning session falling 27 points. Kiwi data included building consents which missed forecast while Business Confidence beat expectations. While US GDP growth was weak in 1Q, this is historically quite common in the US and growth often rebounds in 2Q. And since then we have seen significant weakness in the USD and there is a good chance we start to see the data pick up from here.

The US dollar also looks unlikely to break significantly lower. The DXY dollar index is currently resting on a very consistent resistance level around 93.8 and it has already bounced off this level three times in April and May. Indicating that it would not take all that much good economic news out of the US to start seeing the US dollar start gaining strongly.

The EconoTimes comments today that building permits in New Zealand are likely to remain on a higher trend, according to ANZ. Building permits have been volatile, with consent issuance increasing sharply by 11% m/m in February, following a drop of 8% in January. However, the issuance trend is at a decent pace of 0.9% m/m, which is lower from almost 2% pace witnessed in mid-2015. However, the positive trend is likely to continue supported by strong growth in population, current drop in interest rate, the policymakers’ intentions to increase housing supply and the hints given by increasing housing prices, added ANZ.

But the clear differences region wise will be seen. A close watch will be kept on the capacity’s negative effect and construction cost inflation in Auckland. Extreme imbalance in housing demand/supply is seen in Auckland. This is expected to be a main factor is boosting the current increase in permit issuance, noted ANZ.

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
	Japan – Showa Day
NZD	Building Consents (MoM) (Mar)	-9.8%		10.8%
NZD	ANZ Business Confidence (Apr)	6.2		3.2
AUD	PPI (QoQ) (Q1)	-0.2%	0.2%	0.3%
AUD	Private Sector Credit (MoM) (Mar)	0.4%	0.6%	0.6%
EUR	German Retail Sales (MoM) (Mar)		0.3%	-0.4%
EUR	Core CPI (YoY)		0.9%	1.0%
EUR	GDP (QoQ) (Q1)		0.4%	0.3%
EUR	Unemployment Rate (Mar)		10.3%	10.3%
GBP	BoE MPC Member Cunliffe Speaks
USD	Core PCE Price Index (MoM) (Mar)		0.1%	0.1%
USD	Personal Spending (MoM) (Mar)		0.2%	0.1%
CAD	GDP (MoM) (Feb)		-0.1%	0.6%
CAD	RMPI (MoM) (Mar)		3.7%	-2.6%
USD	Chicago PMI (Apr)		53.0	53.6
USD	Michigan Consumer Sentiment (Apr)		90.0	89.7
USD	Baker Hughes U.S. Rig Count			343

Upcoming Economic Events that you should be monitoring:

Monday, May 2, 2016

Cur.	Event	Actual	Forecast	Previous
	China – Labor Day
	United Kingdom – Early May Bank Holiday
AUD	HIA New Home Sales (MoM) (Mar)			-5.3%
CNY	Caixin Manufacturing PMI (Apr)			49.7
EUR	German Manufacturing PMI (Apr)		51.9	51.9
EUR	Manufacturing PMI (Apr)		51.5	51.5
USD	Manufacturing PMI (Apr)			50.8
USD	ISM Manufacturing Employment			48.1
USD	ISM Manufacturing PMI (Apr)		51.5	51.8