NZD/USD Fundamental Analysis March 7, 2012, Forecast

Analysis and Recommendation: (close of the Asian session)

 The NZD/USD  fell against the greenback as China cut its growth target to the lowest level since 2005, sapping demand for growth-linked assets including the kiwi. The New Zealand dollar fell to .8147 cents from 0.8206 cents after manufacturing and services in the euro zone contracted more than expected.

Monday, Premier Wen Jiabao, in his annual state-of-the nation report to China’s parliament, reduces growth for 2012 of 7.5 percent. That would be the slowest pace of expansion since 1990 and well down on last year’s 9.2 percent growth rate.

The Reserve Bank of Australia kept its key cash rate on hold at 4.25% Tuesday, as expected. RBA Governor Stevens said, “Recent information is consistent with the expectation that the world economy will grow at a below-trend pace this year, but does not suggest that a deep downturn is occurring. With growth expected to be close to trend and inflation close to target, the board judged that the setting of monetary policy remained appropriate for the moment.”

From the USA on Monday:  Only a dire situation would call for the Federal Reserve to buy more assets, and that is unlikely given the better-looking economic data, a top central bank official said on Monday. Dallas Fed President Richard Fisher, an outspoken policy hawk, added that he was perplexed by Wall Street’s continued preoccupation with the possibility that the Fed could engage in a third round of large-scale buying of assets

The services sector expanded at its fastest pace in a year in February helped by a gain in new orders and as the housing market shows signs of stabilizing. The Institute for Supply Management said its services index rose to 57.3 in February last month from 56.8 in January, in sharp contrast to economists’ expectations for a drop to 56.1. It was the index’s highest level since February 2011. 

Major Greek bondholders announced their support for a deal that will deeply cut the value of their holdings as their contribution to keeping the country afloat. The steering committee of creditors, which includes 12 major investors in Greek bonds and was involved in drawing up last month’s landmark deal, said it would accept the bond swap offer

Monday, Premier Wen Jiabao, in his annual state-of-the nation report to China’s parliament, reduces growth for 2012 of 7.5 percent. That would be the slowest pace of expansion since 1990 and well down on last year’s 9.2 percent growth rate.

In the Asian Session Tuesday, Crude-oil slipped, following falls across equity markets amid concerns about slowing global growth.

Oil had dipped in the US market to close below $107 a barrel but continued to be pressured by a mixed bag of economic data and China’s cut to its economic growth target. Dropping to 106.70

March 6, 2012 Economic Releases actual v. forecast

 

Economic Events: (GMT)

00:30     AUD       GDP (QoQ)                                         0.7%                      1.0%

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.                           

13:15     USD      ADP Nonfarm Employment          205K                      170K                     

 13:30    USD      Nonfarm Productivity (QoQ)       0.8%                      0.7%                     

 13:30    USD       Unit Labor Costs (QoQ)              1.2%                      1.2%

The ADP National Employment Report is a measure of the monthly change in non-farm, private employment, based on the payroll data of approximately 400,000 U.S. business clients. The release, two days ahead of government data, is a good predictor of the government’s non-farm payroll report. The change in this indicator can be very volatile.

Nonfarm Productivity measures the annualized change in labor efficiency when producing goods and services, excluding the farming industry. Productivity and labor-related inflation are directly linked-a drop in a worker’s productivity is equivalent to a rise in their wage.

Unit Labor Costs measure the annualized change in the price businesses pay for labor, excluding the farming industry. It is a leading indicator of consumer inflation.

20:00     NZD      Interest Rate Decision                 2.50%                    2.50%                   

 20:00    NZD      RBNZ Rate Statement                                                                                                  

 20:00    NZD       RBNZ Monetary Statement          

The Reserve Bank of New Zealand (RBNZ) governor decides where to set the rate after consulting senior bank staff and external advisers. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.           

The Reserve Bank of New Zealand’s (RBNZ) quarterly Monetary Policy Statement outlines how the bank will achieve its inflation targets, how it proposes to formulate and implement monetary policy during the next five years and how monetary policy has been implemented since the last statement’s release.                                                        

 23:50    JPY        GDP (QoQ)                                      -0.2%                     -0.6%                    

23:50     JPY        GDP Price Index (YoY)                 -1.6%                     -1.6%

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

Sovereign Bond Auction Schedule

Mar 07  10:10  Sweden  Nominal bond auction

Mar 07  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Mar 07  10.30  UK  Auctions new Sep 2017 conventional Gilt

Mar 08  16:00  US

Announces auctions of 3Y Notes on Mar 12, 10Y Notes on Mar

13 & 30Y Bonds on Mar 14

Mar 08  16:30  Italy   Details BOT auction on Mar 13

Mar 09  11:00  Belgium  OLO mini bond auction

Mar 09  16:30  Italy   Details BTP/CCTeu on Mar 14