NZD/USD Fundamental Analysis February 29, 2012, Forecast

Economic Events: (GMT)

00:00     AUD       HIA New Home Sales (MoM)                           -4.9%

Housing Industry Association (HIA) New Home Sales measures the change in the number of newly constructed homes sold.                    

 00:30    AUD      Construction Work Done (QoQ)                  -0.6%                     12.5%   

Construction Work Done measures the change in the total value of completed construction projects. It provides an early indication of trends in building and engineering construction activity. The data is an estimate, based on a survey of approximately 80% of the value of both building and engineering work done during the quarter.             

00:30     AUD       Retail Sales (MoM)                   0.3%                      -0.1%      

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.      

13:30     USD       GDP Price Index (QoQ)                  0.4%                      0.4%

13:30     USD       GDP (QoQ)                            2.8%                      2.8%

The GDP Price Index measures the annualized change in the price of all goods and services included in gross domestic product. It are the broadest inflationary indicator.           

14:30     USD       FOMC Member Fisher Speaks

Federal Reserve Bank of Dallas President and Federal Open Market Committee (FOMC) voting member (2008 and 2011) Richard Fisher is to speak. FOMC members are responsible for setting the benchmark interest rate and their speeches are closely watched for indications on the future possible direction of monetary policy.                                                                                                         

14:45     USD       Chicago PMI                    61.8                        60.2

The Chicago Purchasing Managers’ Index (PMI) determines the economic health of the manufacturing sector in Chicago region. A reading above 50 indicates expansion of the manufacturing sector; a reading below indicates contraction. The Chicago PMI can be of some help in forecasting the ISM manufacturing PMI.                    

 15:00    USD      Fed Chairman Bernanke Testifies

Federal Reserve Chairman Ben Bernanke (February 2006 – January 2014) is to testify on the economic outlook and recent monetary policy actions before the Joint Economic Committee, in Washington DC. The testimony is in two parts; the first is a prepared statement, then the committee conducts a question and answer session. The Q&A portion of the testimony can see heavy market volatility for the duration.

19:00     USD      Beige Book

The Federal Reserve’s Beige Book is a report on current economic conditions in each of the 12 Federal districts in the U.S. It gives a picture of economic trends and challenges in the U.S. It is released 8 times a year, 2 weeks before each Federal Open Market Committee meeting. The report is used by the FOMC in their decision on short-term interest rates.                                             

23:50     JPY        Capital Spending                      -6.50%                 -9.80%

Capital Spending measures the change in the overall value of capital investment made by companies. It is a leading indicator of business conditions and economic health. The number measures the change from the reported quarter to the same quarter a year earlier.

Analysis and Recommendation: (close of the Asian session)

NZD/USD is trading at 0.8406. The Kiwi gained almost one US cent as investors position themselves ahead of European Central Bank lending and after German lawmakers approved Greek aid.

The New Zealand dollar rose as high as 84.17 US cents overnight from 83.26 cents on Monday at 5pm. Investors are speculating that the ECB’s second tranche of bank refinancing on Wednesday will help stimulate the region’s economy, lifting the prospects for global growth and growth-linked assets including the kiwi dollar.

Price cuts by mainland Chinese real-estate developers suggest profits will be under increasing pressure this year, according to Tuesday research published by Credit Suisse, which said the consensus view has been too optimistic on the earnings outlook for the property sector.

Japanese retail sales slowed their growth in January, rising 1.9% from a year earlier compared to December’s gain of 2.5%, the Ministry of Economy, Trade and Industry said Tuesday. Large retailers saw their January sales drop a seasonally adjusted 1.0%, widening from the previous month’s 0.3% fall.

Standard & Poor’s said late Monday it downgraded the sovereign credit ratings of Greece to selective default, or SD, because collective action clauses recently put into certain debt agreements. S&P had previously had a CC long-term rating and a C short-term rating on Greece.

 US Pending home sales climbed 2% in January to the highest level since April 2010, when buyers were taking advantage of a now-expired tax credit. The pending-home-sales index rose to 97.0 from a downwardly revised 95.1 reading in December, the National Association of Realtors reported Monday.

 

Economic Data February 27, 2012 actual v. forecast

 

Sovereign Bond Auction Schedule

Feb 29  10:10  Sweden  Auctions T-bills

Feb 29  10:30  Germany  Eur 4.0bn 2.0% Jan 2022 Bund

Feb 29  15:30  Sweden  Details nominal bond auction on Mar 07

Mar 01  09:30  Spain  Bono auction

Mar 01  09:50  France  OAT auction

Mar 01  10.30  UK  Auctions 4.0% 2022 conventional Gilt