NZD/USD Fundamental Forecast – March 29, 2016

The NZD/USD dipped 11 points during the holiday session due to increased strength in the US dollar. The kiwi reached 0.6680.0 Markets, with the exception of Europe, will return to some sense of routine this week with many countries back to work after the Easter break. Most of Europe that include Germany, the UK and Switzerland, will still be closed though for Easter Monday holidays. The markets in Australia and New Zealand are also closed today for Easter Monday. “Markets are starting to take more seriously the prospect of a U.S. interest rate rise as early as next quarter which has led to a resurgence in the U.S. currency. The stronger greenback inherently puts downward pressure on Aussie-influential commodities that are priced in the U.S. currency,” says Joe Manimbo at Western Union.

Regardless of the near-term action, the outlook remains positive for the AUD and NZD with markets and analysts alike turning more positive. The NZD is also expected to be more resilient as financial markets have priced in our view that the Reserve Bank of New Zealand (RBNZ) is likely to cut the OCR by 25bp later this year.

ABN Amro are the latest to announce an update on their currency expectations for 2016 through 2017 and one of the stand-out changes pertain to their stance on the New Zealand and Australian dollars.

The two currencies were under pressure heading into 2016 but a change in circumstances has meant the NZD and AUD are two of the year’s best performers.

Last week’s Federal Reserve policy statement appeared to pour cold water on any imminent rate hikes, but recent hawkish statements by Federal Reserve officials have surprised the markets and sent the Aussie sharply lower on Wednesday. Earlier in the week, John Williams, president of the San Francisco Fed, said that the Fed could raise rates in April and June, if economic conditions improve. Although the dot plot (an FOMC projection of rate hikes) was lowered at the March meeting, he insisted that the Fed had not changed its path of rate hikes. His comments were echoed by Atlanta Fed Dennis Lockhart, who also said that an April rate move was a clear possibility

FxEmpire provides in-depth analysis for each asset 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, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Tuesday, March 29, 2016

Government Bond Auctions

Date Time and Country

Mar 29 19:00 US Holds 5-year notes auction

Mar 30 11:03 Sweden Holds bond auction

Mar 30 11:10 Italy Holds bond auction

Mar 30 11:30 Germany Eur 4bn Apr 2021 Bobl

Mar 30 19:00 US Holds 7-year notes auction

Mar 31 17:20 Sweden Details of I/L auction on Apr 07

Apr 01 N/A Italy Details of new BTP€i on Apr 04