The New Zealand dollar had its time in the sun, recovering from previous lows. It’s now money time for the pair, with the central bank set to make its decision. Will they cut? Here is an analysis of fundamentals and an updated technical analysis for NZD/USD.
Inflation expectations picked up in Q2, standing at 1.7%. After weak CPI numbers, this forward-looking inflation figure is encouraging for the RBNZ. Good news also came out favorably with a jump of 6.6%. In the US, data was mixed until the NFP came. The US gained more jobs than expected and this pushed NZD/USD lower.
Updates:
NZD/USD daily graph with support and resistance lines on it. Click to enlarge:
- RBNZ decision: Wednesday, 21:00. The Reserve Bank of New Zealand is likely to make another move on rates, cutting them from 2.25% to 2%. While inflation expectations did bounce, low inflation and a slightly cooler housing market in Auckland allow the central bank to slash the rates. In addition, the higher value of the kiwi justifies a cut. The team led by Graeme Wheeler has surprised us in the past, so nothing is fully priced in. It is also important to watch the statement for further rate hints as well as tune into Wheeler’s press conference for further hints about the future of monetary policy. The presser begins 5 minutes after the announcement.
- FPI:Â Wednesday, 22:45. Food prices matter to New Zealand, as the island nation exports these soft commodities. A rise of 0.4% was seen in June, and another tick up is on the cards for July.
- Business NZ Manufacturing Index; Thursday, 22:30. This PMI-like figure has shown solid growth in New Zealand’s manufacturing sector. A score of 57.7 points could be followed by a slightly lower figure now.
- Retail sales: Thursday, 22:45. New Zealand publishes retail sales data only once per quarter, making every release a roller-coaster for markets. In Q1, the volume of sales advanced by 0.8% and core sales by 1%. Rises of 1% and 1.1% in the headline and core numbers are expected respectively.
