NZD/USD Fundamental Forecast – May 31, 2016

The NZD/USD dipped 12 points against an ever stronger US dollar after Janet Yellen said a rate increase shortly would be appropriate. There is little data on the calendar today as the month prepares to close. The kiwi is trading at 0.6692. The minutes indicated that a near-term rate hike from the Fed was far closer than what many in markets had anticipated, something that along with hawkish commentary from several leading Fed officials and solid US economic data has seen the market begin to price in the likelihood of two rate increases this year.

Scoop reported that Yellen told an audience at Harvard University that it was appropriate “for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months, such a move would be appropriate.” The comments add to the rate hike hints from other Fed officials in recent speeches, although apart from saying the June Federal Open Market Committee meeting is “live” for a rate hike, no further guidance has been given on timing.

“Yellen’s comments were interpreted as slightly hawkish, corroborating the recent views of other FOMC members, albeit tempered by data-conditionality,” said Imre Speizer, currency strategist at Westpac Banking Corp, in a report. He said 66.70 US cents was the “immediate downside risk” for the kiwi, while over the next few months it could reach 65 cents because of the prospects of the Reserve Bank cutting interest rates while the Fed hikes.

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:

Tuesday, May 31, 2016

Government Bond Auctions

Date Time       Country           Auction

May 30 11:10 Italy Holds bond auction

Jun 01 10:30 Denmark Holds bond auction

Jun 01 11:30 Germany Eur 4bn Apr 2021 Bobl

Jun 01 11:30 UK 1.5% 2021 Gilt

Jun 01 17:20 Sweden Announces details of bond auction on Jun 08

Jun 02 10:30 Spain Holds bond auction

Jun 02 11:03 Sweden Holds I/L bond auction

Jun 02 11:50 France Holds bond auction