NZD/USD: stuck in 0.7130-0.7250 range, awaiting week to unfold
|NZD/USD has moved within a 30 pip range at the start of the week ahead of a relatively busy one ahead for the NZ calendar.
Weekend politics: the euro is under scrutiny
While markets are confident in the RBNZ's bullish assessment of the economy, the week ahead will deliver a number of events for the market to assess for themselves, including the trade balance, ANZ business activity and confidence and a speech from the RBNZ's assistant governor, McDermott. China will also be a focus when we will receive the latest data on the manufacturing and non-manufacturing sector for Feb.
In respect to the Fed and the dollar, the dollar index is rangebound and not necessarily dominating across the board currently with softness vrs the yen and sterling, but not the bird is it challenges below the 0.72 handle again.
Analysts at Brown Brothers Harriman explained that the FOMC minutes and official comments left March and June Fed fund futures contracts implying a half a basis point higher rates, which is essentially the spread between the bid and offer. "To the extent there has been a shift, it is a recognition by many, including ourselves, that a move in May has much to recommend itself. The implied yield on the May contract rose two basis points last week. "
Market wrap: dollar rebounded despite European pressure - Westpac
NZD/USD levels
With NZD/USD oscillating around the 0.72 handle and below the hourly 20, 50 and 200 smoothed ma's, analysts at Westpac noted that the bird is in neutral. "In a 0.7130-0.7250 range, waiting for a break to signal near-term direction," they explained, however adding for a longer term view, "The Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD down to 0.7000 or lower. Granted, the NZ economy is strong and dairy prices have risen, but these forces are subservient to the US dollar’s trend."
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