NZD/USD Fundamental Forecast – March 17, 2016

Analysis and Recommendation:

The NZD/USD posted a two-sided trade on Wednesday before moving slightly higher. The Forex pair finished at .6602, up 0.0001 or +0.02%.

Early weakness was fueled by a decline in the prices of daily products. In the overnight GlobalDairyTrade auction, the prices of dairy products fell 2.9% to $2190 a tonne. This was the fifth decline in the six auctions held so far in 2016. Meanwhile, the global milk glut showed little signs of abating.

The early choppy trade was also fueled by position-squaring ahead of the release of the U.S. Federal Reserve’s monetary policy statement later today.

The Fed will conclude its two-day FOMC meeting today and release its statement at 2:00 p.m. ET along with new economic forecasts and a press conference by Fed Chair Janet Yellen. The central bank is widely expected to leave interest rates unchanged, but traders will pay close attention to the tone and wording of the accompanying statement.

In addition to the Fed statement, investors will get the opportunity to react to the latest data on U.S. housing starts, consumer inflation and industrial production.

Earlier today, Statistics New Zealand said the unadjusted current account deficit for the three months to the end of December was 2.61 billion New Zealand Dollars (US$1.72 billion). Economists had expected a quarterly deficit of NZ$3.10 billion.

The nation’s net external debt position decreased to NZ$135.8 billion in the December quarter, equivalent to -55.2% of GDP.

A hawkish Fed statement is likely to put pressure on the NZD/USD. Look for the Forex pair to be underpinned if the central bank is dovish.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

Upcoming Economic Events that you should be monitoring:

Thursday, March 17, 2016

Government Bond Auctions

Date Time and Country

Mar 16 11:03 Sweden Holds bond auction

Mar 16 11:30 Germany Eur 4bn 0.5% Feb 2026 Bund

Mar 17 10:30 Spain Holds bond auction

Mar 17 11:50 France Holds bond auction

Mar 17 19:00 US Holds 10-year TIPS auction