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NZD / USD: waiting for NFP _01/04/2016

Technical analysis and trading recommendations -

The key event today is the news from the US. At 12:30 (GMT) will be published data on the number of new jobs created in the US in March, in the non-agricultural sector of the economy and unemployment. The labor market in the US is in a stable condition, and the unemployment rate decreases, while below 5.0%. If the data are confirmed or will be better than expected (expected 205 000 new jobs), the dollar strengthened across the financial markets. However, the increase in the dollar may be short-term, given the Fed's wait and see attitude and a tendency for a more loose monetary policy than previously planned.

Starting on Monday, market participants will re-assess the situation on the currency market, based on the recent statements by Fed officials and economic data.
Despite the fact that in early March, RB New Zealand cut interest rates by 0.25% to 2.25%, the pair NZD / USD has strengthened significantly since the fall of the decrease rate. Then the pair NZD / USD has updated March low near the 0.6575 mark on the information that the decrease in the index of world prices for dairy products was 2.9%. Nevertheless, in spite of the NZD / USD pair rose incurred losses this week above 0.6900. The undoubted factor in the strengthening of the pair, was the statement of the Fed D.Yellen that the economic and financial uncertainty in the world are the risks to the US economy and necessitate slower rise in interest rates. After the speech D.Yellen dollar collapsed across the market, including in the pair NZD / USD.

For RBNZ once again exacerbated the problem associated with the strengthening of the national currency against the US dollar as commodity prices are denominated in US dollars. More expensive national currency is not profitable for the country's exporters. About 20% of all products manufactured in New Zealand and intended for export. The most important export sector of the economy is considered to be agriculture and the export of dairy products at the same time is not less than 18% of total exports.

Rise in exports, the decline of the Chinese imports from New Zealand on the background of a slowdown in China's economy, as well as low international prices for dairy and other agricultural produce, painfully reflected on the state of the New Zealand economy.

Back in March, in the RBNZ pointed to fears of further deterioration in the global economic outlook and the decline in inflation expectations in most of New Zealand.

Now, however, recently taken by easing monetary policy in New Zealand is completely offset by the growth of the New Zealand dollar against the US dollar in March.

So far, the positive impetus for further growth of the pair received from the speech D.Yellen preserved. However, the stronger will grow a pair NZD / USD, the greater will be the pressure on the RBNZ in terms of further reduction in interest rates in most of New Zealand.

Expectations that the key interest rate in New Zealand will be reduced to 1.75% from its current level of 2.25%, and in the course of the RBNZ meetings in June and August, are fully justified.

Friday, 01 Apr, 2016 / 12:03

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