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NZD/USD Fundamental Analysis – November 19, 2015 – Forecast

Barry Norman

Analysis and Recommendation:

The NZD/USD continued to fall giving up 8 points to trade near a new low at 0.6464 as the US dollar advanced and the DairyTrade auction disappointed.  Global dairy prices fell for the third consecutive auction, adding to pressure on New Zealand farmers and to the chance that the central bank could cut interest rates at its meeting next month.

The benchmark GlobalDairy Trade price index fell 7.9 percent to $2,345 in the fortnightly auction established by New Zealand dairy exporter Fonterra. The fall came despite slowing New Zealand dairy supply. Earlier this week Fonterra reiterated that it expects milk production to fall at least 5 percent this season. “The low run of dairy prices looks set to consign the dairy sector to another dismal season,” ANZ analysts said in a research note. “Commodity producers will be doing it tough, and this will permeate throughout economies, but let’s not forget the benefits accruing to consumers and downstream users,” the ANZ analysts said.

The central bank last week said struggling farmers facing a second season of weak dairy prices are a growing risk to the economy. The danger of a substantial rise in bad loans in the dairy sector has increased over the past two years due to high debt levels and falling milk prices, the Reserve Bank of New Zealand said in its six-monthly financial stability report. The Reserve Bank of New Zealand is likely to cut interest rates at its next policy review in December, having kept its benchmark rate unchanged in October as widely anticipated.

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:

Cur.

 

Event

Actual

Forecast

Previous

 

  USD

 

FOMC Member Tarullo Speaks  

 

 

 

 

 

  USD

 

API Weekly Crude Oil

-0.482M

1.800M

6.300M

 

 

  AUD

 

RBA Assist Gov Debelle Speaks 

 

 

 

 

 

  AUD

 

Wage Price Index (QoQ) (Q3)

0.6%

0.6%

0.6%

 

 

  USD

 

FOMC Member Lockhart Speaks 

 

 

 

   

 

Upcoming Economic Events that you should be monitoring:

Thursday, November 19, 2015

Cur.

 

Event

Actual

Forecast

Previous

 

  NZD

 

PPI Input (QoQ) (Q3)

 

 

-0.3%

 

 

  JPY

 

Adjusted Trade Balance

 

-0.38T

-0.36T

 

 

  JPY

 

Exports (YoY) (Oct)

 

-2.1%

0.6%

 

 

  JPY

 

Trade Balance (Oct)

 

-292B

-115B

 

 

  JPY

 

BoJ Press Conference  

 

 

 

 

 

  EUR

 

German Buba President Weidmann

 

 

 

 

 

  GBP

 

Core Retail Sales (MoM) (Oct)

 

-0.5%

1.7%

 

 

  GBP

 

Core Retail Sales (YoY) (Oct)

 

3.9%

5.9%

 

 

  GBP

 

Retail Sales (MoM) (Oct)

 

-0.5%

1.9%

 

 

  GBP

 

Retail Sales (YoY) (Oct)

 

4.2%

6.5%

 

 

  GBP

 

CBI Industrial Trends Orders (Nov)

 

-10

-18

 

 

  EUR

 

Monetary Policy Meeting  

 

 

 

 

 

  USD

 

Initial Jobless Claims

 

271K

276K

 

 

  USD

 

Philadelphia Fed Manufacturing Index

 

-1.0

-4.5

 

 

  USD

 

Philly Fed Employment (Nov)

 

 

-1.7

 

 

  USD

 

FOMC Member Lockhart Speaks 

 

 

 

   

Government Bond Auctions

Date Time Country

Nov 19 10:30 Spain 0.25% Apr 2018 Bono, 1.15% Jul 2020 Bono, 5.4% Jan 2023

Nov 19 10:50 France Eur 7-8bn; 4.25% Oct 2018 OAT, 0.25% Nov 2020 OAT, 2.25%

Nov 19 11:50 France Eur 1-1.5bn; 0.25% Jul 2024, 1.85% Jul 2027, 3.15% Jul 2032

Nov 19 N/A US Holds 10-year TIPS auction

Nov 20 16:30 Italy Announces details of CTZ/BTPei on 25 Nov

Nov 23 12:00 Belgium Auctions OLOs

Nov 23 N/A US Holds 2-year note auction

Nov 24 17:30 Italy Announces details of BTPs/CCTeu on 27 Nov

Nov 24 N/A Holland Eur 1.0-2.0bn 0.25% Jul 2025 DSL

Nov 24 N/A US Holds 5-year note auction

Nov 25 11:03 Sweden Holds bond auction

Nov 25 11:10 Italy Auctions CTZ/BTPei

Nov 25 11:30 Germany Eur 3bn 1.0% Aug 2025 Bund

Nov 25 N/A US Holds 2-year FRN auction

Nov 25 N/A US Holds 7-year note auction

Nov 26 11:03 Sweden Holds bond auction

Nov 27 11:03 Sweden Holds bond auction

Nov 27 11:10 Italy Auctions BTPs/CCTeus

 

 

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