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NZD/USD Weekly Fundamental Analysis – April 18-22, 2016 -Forecast

By:
Barry Norman
Published: Apr 16, 2016, 04:35 UTC

The NZD/USD closed the week at 0.6918 near the top of its trading range seeing a gain of 1.66% for the week as the US dollar remained weak against its

NZD/USD Weekly Fundamental Analysis – April 18-22, 2016 -Forecast

The NZD/USD closed the week at 0.6918 near the top of its trading range seeing a gain of 1.66% for the week as the US dollar remained weak against its crosses. Scoop New Zealand reported this week that Chinese economic growth slowed from 6.8 percent in the fourth quarter of last year but fixed-asset investment rose 10.7 percent, beating estimates. China is New Zealand’s biggest trading partner and the world’s second-largest economy and its health typically benefits growth-linked currencies such as the kiwi. But the gains are capped because a healthy global economy also increases the prospects that the Federal Reserve will hike interest rates, which would benefit the greenback.

“What’s really happened with the Chinese data is that it has confirmed what we’ve seen in the last month or so that the global situation has been steadily improving,” said Sam Tuck, senior foreign exchange strategist at ANZ Bank New Zealand. “That’s lifted the kiwi over the last month or so as the US (Fed) has stayed dovish. But a better global economy should free up the Fed and allow the US dollar to strengthen.”

Traders are now focused on the release next Monday of the consumer’s price index for the first quarter, which the Reserve Bank has forecast to show a 0.2 percent quarterly for an annual increase of 0.4 percent. That keeps the annual rate below the central bank’s 1 percent to 3 percent target band, which the bank doesn’t expect to reach until the final quarter of 2016. Market expectations are for just a 0.1 percent increase in the first quarter.

The kiwi didn’t move much after the release of the BNZ-BusinessNZ performance of manufacturing index, which fell to a seasonally adjusted 54.7 last month, a five-month low. Traders are relatively evenly split on the timing of an interest rate cut by the Reserve Bank, with about 49.7 percent seeing a cut in the official cash rate to 2 percent on April 28 and 50.3 percent seeing the rate remaining at 2.25 percent, making a cut in June more likely, based on the overnight interest swap curve.

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

NZD/USD daily chart, April 15, 2016
NZD/USD daily chart, April 15, 2016

Major Economic Events for the week:

 
Cur. Event Actual Forecast Previous
Monday, April 18, 2016
  NZD CPI (QoQ) (Q1)   0.1% -0.5%  
Tuesday, April 19, 2016
    EUR German ZEW Economic Sentiment (Apr)   8.0 4.3  
    USD Building Permits (Mar)   1.200M 1.177M  
Wednesday, April 20, 2016
    GBP Average Earnings Index +Bonus (Feb)   2.3% 2.1%  
    GBP Claimant Count Change (Mar)   -10.0K -18.0K  
    USD Existing Home Sales (Mar)   5.29M 5.08M  
    USD Crude Oil Inventories     6.634M  
Thursday, April 21, 2016
    GBP Retail Sales (MoM) (Mar)   -0.2% -0.4%  
    EUR Interest Rate Decision (Apr)        
    USD Philadelphia Fed Manufacturing Index   8.0 12.4  
Friday, April 22, 2016
    EUR German Manufacturing PMI (Apr)   51.0 50.7  
    CAD Core CPI (MoM) (Mar)   0.3% 0.5%  
    CAD Core Retail Sales (MoM) (Feb)   -0.5% 1.2%

Government Bond Auctions

Date Time       Country           Auction

Apr 18 11:00 Belgium Holds OLO auction

Apr 18 13:00 Norway Details of bond auction on Apr 20

Apr 20 11:05 Norway Holds bond auction

Apr 20 11:30 Germany Eur 4bn 0.5% Feb 2026 Bund

Apr 20 17:20 Italy Details of BTP€i auction

Apr 20 17:20 Sweden Details of bond auction on Apr 27

Apr 21 10:30 Spain Holds bond auction

Apr 21 11:03 Sweden Holds I/L bond auction

Apr 21 11:50 France Holds bond auction

Apr 21 19:00 US Holds 5-year TIPS auction

Apr 22 17:20 Italy Announces details bond auction

 

 

 

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