NZD/USD Fundamental Forecast – May 25, 2016

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Published: May 24, 2016, 03:50 UTC

The NZD/USD dipped 32 points giving back a good deal of yesterday’s gains as the US dollar continued to climb as a row of Federal Reserve speakers

NZD/USD Fundamental Forecast – May 25, 2016

The NZD/USD dipped 32 points giving back a good deal of yesterday’s gains as the US dollar continued to climb as a row of Federal Reserve speakers remained hawkish. The kiwi is trading at 0.6732 after a dismal dairy auction. New Zealand’s Reserve Bank has indicated it has scope to cut the official cash rate as a strong currency continues to hold down inflation, though rising expectations for a US rate hike have prompted some forecasters to push out their timeframe, with Bank of New Zealand economists now predicting no change next month.

Farmers want better infrastructure, roads and greater access to broadband, but are not looking for any handouts from the Government in Thursday’s Budget. Dairy farmers across the Tasman are looking to politicians to support them through the current milk price slump but their New Zealand counterparts do not expect any such treatment from the Budget.

Deputy Australian Prime Minister Barnaby Joyce, after a three-day trip to Victoria, last week called for a bipartisan approach to develop a dairy industry support package to help dairy farmers struggling with milk price downgrades from the two biggest players in that market – Murray Goulburn and Fonterra.

But New Zealand dairy farmers, many with memories going back to the farm subsidy days of the 1970s and early 1980s, don’t expect any special treatment from the Budget.

In general terms, Federated Farmers wants the Government to keep a tight rein on the country’s finances, to help farmers improve productivity, and to address the imbalances posed by Auckland’s booming property market.

A rise in global dairy prices offers tentative evidence they may have bottomed out, but any recovery is seen being gradual and will unlikely offer immediate relief to farmers angry about cuts to farmgate prices.

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.

Upcoming Economic Events that you should be monitoring:

Wednesday, May 25, 2016

Cur.	Event	Actual	Forecast	Previous
USD	API Weekly Crude Oil Stock			-1.140M
NZD	Trade Balance (YoY) (Apr)		-3,940M	-3,380M
NZD	Trade Balance (MoM) (Apr)		60M	117M
AUD	Construction Work Done (QoQ) (Q1)		-1.5%	-3.6%
EUR	EU Finance Ministers Meeting
USD	Goods Trade Balance (Apr)		-60.10B	-56.90B
USD	FOMC Member Harker Speaks
USD	Services PMI (May)		53.1	52.8
CAD	Interest Rate Decision		0.50%	0.50%
USD	Crude Oil Inventories			1.310M
USD	FOMC Member Kashkari Speaks
USD	FOMC Member Kaplan Speaks