NZD/USD Fundamental Analysis January 23, 2015 – Forecast

Analysis and Recommendation:

The NZD/USD continues to decline to trade at 0.7534 even though the overall economy of the little nation is doing very well. Traders will keep an eye on the upcoming reserve bank meeting. Traders are pricing in 10 basis points of cuts to New Zealand’s 3.5 percent official cash rate in the coming 12 months after Canada’s central bank joined the growing number of monetary authorities moving to lower rates. That’s heightened expectations Australia and New Zealand will need to follow as investors gear up for the European Central Bank’s policy review today in Brussels, where the regulator is expected to unveil a major quantitative easing program to help revive a sluggish regional economy.

Consumer confidence rose for a second month in January as households grew more upbeat about the prospects for the future.The ANZ-Roy Morgan consumer confidence index rose to 128.9 from 126.5 in December, reflecting elevated optimism that typically comes with the summer months. The current conditions index edged up 0.7 of a point to 126.8, while the future conditions index rose to 130.3 from 126.8 in January. On a seasonally adjusted basis, confidence slipped 1.8 points to 125, still above the decade average of 119.

“Levels of confidence remain elevated and households are still optimistic over the future, suggesting that the domestic expansion has more legs,” ANZ Bank New Zealand economist Steve Edwards said in a note. “Increasingly, households believe that the future is going to be better.”

The New Zealand dollar dropped to a two-and-a-half year low as investors speculate the central bank may have to lower interest rates after the Bank of Canada surprised markets with a rate cut yesterday, and ahead of Europe’s anticipated money printing program

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 up to the data analysis and information in our weekly reports.

Today’s economic releases actual vs. forecast:

 

Upcoming Economic Events that you should be monitoring:

Friday, January 23^rd

Government Bond Auctions

Date Time        Country             Auction

Jan 22               France               Eur 7.5-8.5bn 1.75% Feb 2017 BTAN     

Jan 22               Sweden             Sek 0.5bn 0.25% Jun 2022,

Jan 22               France               Eur 1-1.5bn 0.25% Jul 2018 & 0.25% Jul 2024 OATei

Jan 22               US                    Announces 2-yr FRN, plus 2/5/7 yr. Notes

Jan 22               Italy                  Announces details of CTZ/BTPei on 27 Jan

Jan 22               US                    Auctions Usd 15bn 10-yr TIPS

Jan 26               Germany           Eur 1.5bn 12M (Jan 2016) Bubills

Jan 26               Italy                  Announces details of BTP/CCTeu on 29 Jan

Jan 27              Holland                         Eur 1-2bn 2.75% Jan 2047 DSL (re-opening)

Jan 27               Spain                3 & 9M T-bill auction

Jan 27               Italy                  Auctions CTZ/BTPei

Jan 27               US                    Auctions 2-yr FRN, plus 2-yr Notes