NZD/USD Fundamental Forecast – September 16, 2016

The NZD/USD headed lower after a disappointing GDP data release this morning. The kiwi is down 17 points at 0.7266. The New Zealand Q2 GDP came in at 0.9% against an expectation of 1.1% although the previous report was revised upward taking a bit of heat of the markets. At the same time Business NZD PMI data came in lower than last month’s reporting at 55.1. Government data showed gross domestic product, which is a broad measure of the health of the economy, grew at a slower than expected 0.9 percent in the three months to June.

That compares with a revised 0.9 percent in the March quarter, and 0.9 percent in the quarter before that.

“Growth this quarter is being driven by strong domestic and export demand,” Statistics New Zealand’s national accounts senior manager Gary Dunnet said.

The housing market helped propel the economy, as construction surged 5 percent which in turn boosted activity in the manufacturing and services sector.

Glass, cement and concrete production – all components in housing – jumped, while real estate services grew due to the rise in property sales.  Higher investment also reflected more money being pumped into the building of houses.

China is on holiday for the next few days leaving Asian volumes lower than usual as traders become sidelined ahead of next weeks loaded events with the BoJ and the Fed reporting.

The US dollar continues to climb as the Fed moved into its blackout period while traders up their outlook for a small rate increase at next week’s meeting while rumors say that the BoJ will move deeper into negative interest rates.

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Upcoming Economic Events that you should be monitoring:

 September 16, 2016

Government Bond Auctions

Date Time Country Auction

Sep 15 10:30 Spain 0.75% Jul 2021 Bono, 1.3% Oct 2026 bond & 1.95% Jul 2030

Sep 15 10:50 France Eur 5-6bn 0% Feb 2019 & May 2021 OATs

Sep 15 11:03 Sweden Sek 0.5bn 0.125% Jun 2019 I/L & Sek 0.5bn 4% Dec 2020 I/L

Sep 15 11:50 France Eur 0.75-1.25bn 0.1% Mar 2021 & Mar 2025 OAT

Sep 19 11:00 Belgium Holds OLO auction

Sep 20 11:30 UK Jul 2047 Gilt

Sep 21 10:30 Denmark Holds bond auction

Sep 21 11:03 Sweden Holds bond auction

Sep 21 11:30 Germany Eur 4bn 0% Oct 2021 Bobl

Sep 22 17:20 Italy Announces details of bond auction