NZD/USD Weekly Forecast Jan. 23-27, 2012, Fundamental Analysis

NZD/USD Weekly Forecast Jan. 23-27, 2012, Fundamental Analysis

The U.S. economy showed signs of recovery in some sectors, which increased confidence among investors. On the other hand Asian bourses rallied amid the risk appetite after China reported better than expected GDP.

The New Zealand inflation retreated during the fourth quarter, reducing chances of a rate hike from the RBNZ this week and leave rates at 2.50%, where the central bank could prefer to keep the rate steady at its lowest level in order to boost the economic recovery.

The New Zealand dollar was one of the best performers against greenback, as Kiwi ignored the disappointing data from the New Zealand economy and benefited from the current risk appetite in the market.

Major highlights for this week that will affect the NZD/USD pair’s trading:

Monday January 23:

On Monday, both economies will not release any fundamentals, where the pair’s movements will depend on the market sentiment.

Tuesday January 24:

At 15:00 GMT, the U.S. economy will issue the Richmond Fed Manufacturing Index for January, where it’s expected at 5.0 from the previous reading of 3.0.

Wednesday January 25:

On Wednesday at 20:00 GMT, the Reserve Bank of New Zealand will announce its rate decision, where it’s expected that the central bank will keep its benchmark interest rate steady at 2.50%.

The U.S. economy will report the House Price Index for November which had a previous reading of –0.2%. On the other hand, the Pending Home Sales for December is expected with 1.0% rise slowing from the previous month’s surge of 7.3%.

At 17:30 GMT, the Federal Reserve Bank will announce its Open Market Committee monetary decision, where it’s expected that the central bank will keep its interest rate near zero and the monetary policy unchanged.

Thursday January 26:

On Thursday at 21:30 GMT (Wednesday) we await the Business NZ Performance of Manufacturing Index for December, where the previous reading was 45.7.

At 13:30 GMT, the U.S. economy will release the Durable Goods Orders for December, where it’s expected at 2.0% from the prior reading of 3.8%. While the Durables Exclude Transportation had a previous reading of 0.3% expected at 1.0%.

At 13:30 GMT, the U.S. economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for the state unemployment insurance dropped to 352 thousand last week.

The U.S. Leading Indicators for December will be released at 15:00 GMT, with a previous reading of 0.5% and expected to come at 0.7%.

On the other hand, the New Home Sales for December is expected to come at 1.6% in line with the prior reading.

Friday January 27:

On Friday at 21:45 GMT (Thursday), the New Zealand economy will release the Trade Balance for December, where it’s expected to show a deficit of NZ$50 million from the previous deficit of NZ$308 million.

Imports for December are expected to come at NZ$4.10 billion from the previous NZ$4.22 billion; while exports are expected at NZ$ 4.11 billion from the previous NZ$3.91 billion.

The U.S. economy will release the annualized Gross Domestic Product for the fourth quarter at 13:30 GMT, where the U.S. economy is expected to have expanded at a stronger pace of 3.0% from the previous 1.8%.

The Core Personal Consumption Expenditure for the fourth quarter is expected to come at 0.9% from the previous 2.1%, while the fourth quarter Personal Consumption is expected to come at 2.3% from the previous 1.7%.

The University of Michigan Confidence for January will be released at 14:55 GMT, with a previous reading of 74 and expected to be revised slightly to 73.9.