Forex Market: NZD/USD daily trading forecast

Yesterday’s trade saw NZD/USD within the range of 0.6270-0.6339. The pair closed at 0.6294, losing 0.40% on a daily basis, while extending losses from Monday. The daily low has been the lowest level since September 10th, when the cross registered a low of 0.6255.

At 9:22 GMT today NZD/USD was losing 0.28% for the day to trade at 0.6277. The pair tested the lower range breakout level (S4), as it touched a daily low at 0.6256 at 6:00 GMT. It is now the new lowest level since September 10th.

Today the cross may be influenced by a number of macroeconomic reports as listed below.

Fundamentals

United States

Manufacturing PMI by Markit – preliminary estimate

Manufacturing activity in the United States probably remained unchanged in September, with the corresponding preliminary Purchasing Managers’ Index remaining at 53.0, according to market expectations. It has been the lowest PMI value since October 2013. In July the final seasonally adjusted PMI stood at 53.8, while being in line with the preliminary reading.

According to Markit’s statement: “Softer output growth was a key factor contributing to the decline in the headline PMI in August. The latest rise in production volumes was the weakest since the adverse weather-related slowdown recorded in January 2014.”

“Overall new order volumes increased at a solid pace in August, but the rate of expansion eased since the previous month and remained weaker than March’s recent peak. A number of firms suggested that cautious spending patterns among clients had resulted in strong competition for new work.”

“Job creation was sustained across the manufacturing sector in August, with manufacturers noting that new product launches and ongoing expansion plans had encouraged them to boost their payroll numbers. That said, the latest increase in staffing levels was the slowest since July 2014.”

Values above the key level of 50.0 indicate optimism (expanding activity). In case the flash manufacturing PMI showed a better-than-anticipated performance, this would have a moderate bullish effect on the US dollar. The preliminary reading by Markit Economics is due out at 13:45 GMT.

Bond Yield Spread

The yield on New Zealand’s 2-year government bonds went as high as 2.470% on September 22nd, or the highest level since September 14th (2.485%), after which it closed at 2.460% to add 4 basis points (0.04 percentage point) on a daily basis. It has been the first gain in the past three trading days.

The yield on US 2-year government bonds climbed as high as 0.719% on September 22nd, or the highest level since September 17th (0.815%), after which it fell to 0.678% at the close to lose 3.2 basis points (0.032 percentage point) for the day.

The spread between 2-year New Zealand and 2-year US bond yields, which reflects the flow of funds in a short term, expanded to 1.782% on September 22nd from 1.710% during the prior day. The September 22nd yield spread has been the largest one since September 18th, when the difference was 1.787%.

Meanwhile, the yield on New Zealand’s 10-year government bonds soared as high as 3.355% on September 22nd, after which it closed at 3.345% to gain 4 basis points (0.04 percentage point) compared to September 21st. It has been the first increase in the past three trading days.

The yield on US 10-year government bonds climbed as high as 2.198% on September 22nd, after which it slipped to 2.132% at the close to lose 6.7 basis points (0.067 percentage point) on a daily basis.

The spread between 10-year New Zealand and 10-year US bond yields expanded to 1.213% on September 22nd from 1.106% during the prior day. The September 22nd yield difference has been the largest one since September 18th, when the spread was 1.216%.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for NZD/USD are presented as follows:

R1 – 0.6300
R2 – 0.6307
R3 (range resistance) – 0.6313
R4 (range breakout) – 0.6332

S1 – 0.6288
S2 – 0.6280
S3 (range support) – 0.6275
S4 (range breakout) – 0.6256

By using the traditional method of calculation, the weekly pivot levels for NZD/USD are presented as follows:

Central Pivot Point – 0.6382
R1 – 0.6474
R2 – 0.6550
R3 – 0.6642

S1 – 0.6306
S2 – 0.6214
S3 – 0.6138