NZD/USD Fundamental Analysis September 13, 2013 Forecast

Analysis and Recommendation:

The NZD/USD continued to march upwards this morning to trade at 0.8120 after the Reserve Bank of New Zealand led by Graham Wheeler held rates and policy. The kiwi gained 38 points. Reserve Bank governor Graeme Wheeler has kept the official cash rate unchanged at its record low 2.5 per cent. The cash rate has remained at that level since March 2011 but Mr Wheeler said it was likely to rise next year and by more than previously signaled. “The extent and timing of the rise in policy rates will depend largely on the degree to which the momentum in the housing market and construction sector spills over into broader demand and inflation pressures,” he said.

The central bank ramped up its forecast for increases to the 90-day bank bill rate, often seen as a guide for the cash rate, with a sharper lift in the middle of next year. The higher projection was due to stronger-than-expected net migration and export commodity prices, and the recent depreciation in the New Zealand dollar, the bank said in the September monetary policy statement.

Traders are pricing in a hike of about 25 basis points early next year, and about 100 points over the coming 12 months, according to the overnight index swap curve. Mr Wheeler said the cash rate would probably stay on hold for the rest of the year and repeated his calls that the currency remained overvalued. “A lower rate would reduce headwinds for the trad-able sector and support export industries,” he said.

CPA Australia Chief Executive Alex Malley said the decision was a responsible and reassuring move for business by the RBNZ. “At a time of historically low global interest rates, a decision to increase interest rates would have risked a serious appreciation of the New Zealand dollar and may have hurt New Zealand’s internationally competitive businesses. “Protecting and enhancing New Zealand’s international competitiveness and integrating with the economies of the Asian region is vital to securing New Zealand’s growth and advantage in the Asian Century,” Mr Malley said. “Looking ahead, and backed up by comments made by the Reserve Bank Governor, we are still expecting a modest increase in rates in March next year.”

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.

Economic Data September 12, 2013 actual v. forecast

 

Upcoming Economic Events that affect the AUD, NZD, JPY and USD

Government Bond Auction

Date Time Country 

Sep 13 10:00 Belgium

Sep 16 09:00 Slovakia

Sep 16 09:10 Norway

Sep 17 08:30 Spain

Sep 17 09:30 Belgium

Sep 18 09:10 Sweden

Sep 18 09:30 Germany

Sep 18 09:30 Portugal

Sep 19 08:30 Spain

Sep 19 08:50 France

Sep 19 09:30 UK

Sep 19 09:50 France

Sep 19 15:00 US

Sep 19 17:00 US

Sep 20 15:30 Italy