NZD/USD has slight losses on Friday, as the pair trades at the 0.68 line in the North American session. In economic news, today’s highlight is UoM Consumer Sentiment, with the markets expecting the indicator to improve to 92.1 points. As well, three FOMC members will deliver remarks during the day, and the markets will be looking for some feedback from the policymakers with regard to Wednesday’s FOMC policy statement.
New Zealand’s economy is very dependent on the export sector, and policymakers are keeping a close eye on China, New Zealand’s second largest export market. Last week, the RBNZ surprised the markets with a rate cut and Governor Graeme Wheeler singled out China as the biggest risk to New Zealand’s growth, leaving the door wide open for more rate cuts during the year. Despite the China slowdown and weak global demand, the New Zealand economy continues to grow at an impressive clip. GDP expanded by 0.9% in the fourth quarter, beating the estimate of 0.7%. This replicated the gain recorded in the third quarter.
As widely expected, the Federal Reserve remained on the sidelines and did not raise interest rates at its policy meeting on Wednesday, maintaining the benchmark rate at 0.25%. The Fed statement noted that the US economy remains vulnerable to an uncertain global economy, but expects to raise rates later in the year due to moderate growth and “strong job gains”. The statement was dovish in tone, a clear departure from the December meeting, when the Fed raised rates for the first time in nine years and talked about four rate hikes over the course of 2016. In just a short three months, global demand has weakened, precipitated by the Chinese slowdown, and US numbers have cooled in comparison to the economy’s torrid pace in the second half of 2015. If inflation and employment numbers push higher in next several months, a rate hike in mid-2016 seems a good bet.
NZD/USD Fundamentals
Friday (March 18)
- 9:00 US FOMC Member William Dudley Speaks
- 10:00 US Preliminary UoM Consumer Sentiment. Estimate 92.1
- 10:00 US Preliminary UoM Inflation Expectations
- 11:00 US FOMC Member Eric Rosengren Speaks
- 14:00 US FOMC Member James Bullard Speaks
Upcoming Key Events
Monday (March 21)
- 10:00 US Existing Home Sales
*Key releases are highlighted in bold
*All release times are DST
NZD/USD for Friday, March 18, 2016
NZD/USD March 17 at 8:10 DST
Open: 0.6836 Low: 0.6782 High: 0.6874 Close: 0.6803
NZD/USD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.6449 | 0.6605 | 0.6738 | 0.6897 | 0.7011 | 0.7100 |
- NZD/USD has been showing marginal movement during the day
- There is resistance at 0.6897
- 0.6738 is providing support
Further levels in both directions:
- Below: 0.6738, 0.6605, 0.6449 and 0.6344
- Above: 0.6897, 0.7011 and 0.7100
- Current Range: 0.6738 to 0.6897
OANDA’s Open Positions Ratio
The NZD/USD ratio is unchanged, as long positions have a strong majority (58%). This is indicative of trader bias towards NZD/USD reversing directions and moving higher.