NZD/USD Weekly Fundamental Analysis, August 17 – August 21, 2015 Forecast

James Hyerczyk
Weekly NZD/USD
Weekly NZD/USD

Weekly Analysis and Recommendations:

Volatility was the theme in the NZD/USD market last week. Early in the week, the Forex pair was slammed into a new low for the year after the People’s Bank of China devalued its currency for a third time on August 12. After conditions stabilized, the market snapped back to its highest level since July 31. The event produced a range of .0182. Despite the wicked price action, the New Zealand Dollar has remained relatively stable for four weeks. 

On July 16, the NZD/USD spiked down to .6497. This led to a rally to .6738. Last week’s low at .6467 was only .0030 below the July low despite talk of Fed rate hike, a plunge in dairy prices and China’s devaluation. This price action suggests consolidation. The low in July corresponded with the second quarter CPI report. This report showed that prices increased by 0.4% over the quarter, leaving the annual rate at 0.3%. Although investors were expecting a quarterly reading of 0.6% and an annual rate of 0.4%, the numbers appeared to be good enough to put in a short-term bottom. 

Before getting too excited about the short-term bottoming action, the consolidation is likely related to oversold technical conditions and position-paring as traders decreased bets for a September rate hike by the Fed. The fundamentals remain weak so the decision for traders this week and over the near-term will be to short at current levels and ride out any retracements, or wait for a retracement into a value zone before refreshing short positions. 

Despite another delay in the Fed rate hike and stable price action, nothing has changed from an economic standpoint that would suggest the start of a prolonged rally. Staying in tune with the Reserve Bank of New Zealand’s July statement, investors should expect weaker prices into the end of the year. New Zealand’s economy may be growing at an annual rate of around 2.5 percent, however, the growth outlook is still soft. In addition, headline inflation is currently below the Bank’s 1 to 3 percent target range. 

While the currency may have moved sideways to higher over the past month, further depreciation is likely, given the weakness in commodity prices. In the eyes of the RBNZ, the currency is still overvalued and given the circumstances, traders should expect further cuts by the central bank. Its next meeting is September 10. 

Last week’s developments out of China should also be a red flag for Kiwi investors. This should lead to heightened uncertainty and increased volatility. 

Don’t be surprised if the NZD/USD appreciates over the short-run because there may be more position-squaring this week following the U.S. consumer inflation number and the Fed minutes on Wednesday. These two events may confirm that a September rate hike has been taken off the table. However, the long-term fundamentals are still bearish. 

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 recent analysis and information in our weekly reports.

Weekly NZD/USD

 Major Economic Events for the Week: 

           Date                         Time              Curr                                   Event                                                      Forecast   Previous

Mon Aug 17

 8:30am ET



Empire State Manufacturing Index





Tue Aug 18

8:30am ET



Building Permits







Housing Starts








GDT Price Index




6:45pm ET



PPI Input q/q




Wed Aug 19

8:30am ET



CPI m/m







Core CPI m/m





10:30am ET



Crude Oil Inventories




2:00pm ET



FOMC Meeting Minutes


Thu Aug 20

2:45am ET



FOMC Member Williams Speaks


8:30am ET



Unemployment Claims





10:00am ET



Philly Fed Manufacturing Index







Existing Home Sales





Fri Aug 21

9:45am ET



Flash Manufacturing PMI




Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.