New Zealand economic developments in this month so far were quite encouraging, well-supported NZD against the AUD, JPY and USD.

Data review:

  • The unemployment rate fell to 4.9% in the March 2017 quarter (down from 5.2% in the previous quarter), while employment continued to grow. The number of employed people increased 1.2 percent (29,000 people) in the March 2017 quarter.
  • Inflation expectations increase for one-year-ahead and two-years-ahead. One-year-ahead inflation expectations have increased to 1.92% from 1.56%. The median also increased to 2.00% from 1.50%. The two-year-ahead expectations had a 0.25 percentage point increase to 2.17% while the median increased to 2.20% from 2.00%.
  • The Reserve Bank left the Official Cash Rate (OCR) unchanged at 1.75 percent. Market participants were expecting a hawkish tone, but RBNZ tone is neutral.
  • GDT: Q1 2017 ended with a 1.7% increase in the GDT Price Index in the final trading event of the quarter. The GDT Price Index has risen 55% over the past 12 months.
  • Total volume of retail sales rose 1.5 percent for the March 2017 quarter.
  • PPI continue to climb. Producer output prices rose 1.4 percent in the March 2017 quarter, while input prices rose 0.8 percent.

 

Upcoming events:

  • Wed 24, April Trade Balance

According to Westpac, “Higher dairy prices support export receipts and trade balance”. Forecast 310M vs 332M.

  • Thur 25, Budget 2017

 

NZDUSD Technical view:

The cross snaps the 3-month falling pattern, low made 0.6817 following RBNZ neutral tone. The cross manages to hold the 200MMA and consolidating in a tight range for 3 straight weeks.

Over near term, trading range remains between 0.6800 rounded and 0.6970, technically remains between 200MA and 20MA on the monthly chart. Besides, U.S dollar confirmed the breakdown last week supports NZD bulls to rebound to the higher end of the trading range.

On the four-hour chart, the price is trading on a verge of symmetrical triangle breakout, resistance seems between 0.6950 and 0.6970, in between its 50DMA seems at 0.6960. Bulls feel comfortable only after crossing these hurdles decisively aims at 0.70000/0.7010 and 0.7050 in the extreme case. If bulls fail at 0.6970-0.6950 likely to re-test the supports.

Over near term, support finds at 0.6900, 0.6860 and 0.6815/0.6800.

On the four-hour chart, we spotted two trading pattern. Symmetrical triangle and inverted H&S pattern, but both the patterns are not given a breakout confirmation.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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