Yesterday’s trade saw NZD/USD within the range of 0.6320-0.6407. The pair closed at 0.6329, losing 0.70% on a daily basis. It has been the first drop in the past three trading days and also the steepest one since September 21st, when the pair slid 0.99%. The daily high has been the highest level since September 18th, when the cross registered a high of 0.6459.
At 9:35 GMT today NZD/USD was up 0.05% for the day to trade at 0.6332. The pair tested the range resistance level (R3), as it touched a daily high at 0.6350 at 8:15 GMT.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
New Zealand
Building permits
At 23:50 GMT Statistics New Zealand is to report on the number of building permits issued in August. Seasonally adjusted permits, issued by the government, were 20.4% more in July. The latter has been the sharpest monthly rate of increase since April 2008, when the number of permits surged at a staggering 82.0%. Building permits, as an indicator, provide clues over demand and future activity in New Zealand’s housing sector. In case the number of permits increased more than anticipated, this would have a bullish effect on the kiwi dollar.
United States
CB Consumer Confidence Index
Confidence among consumers in the United States probably worsened in September, with the corresponding index coming in at a reading of 96.0, according to expectations, from 101.5 in August. The latter has been the highest index value since January, when the gauge was reported at 103.8.
This indicator measures the level of individuals confidence in the US economic development. It is considered as a leading indicator, as it gives an early insight into consumer spending, which accounts for most of the nations GDP.
The index has 1985 as a base year, when the base value was 100. This year was chosen, as it was neither a peak nor a bottom. The Consumer Confidence Index (CCI) is calculated on the basis of a household survey, which reflects consumers opinion on current conditions and future expectations regarding the US economy. Opinions on current conditions account for 40% of the index, while expectations of future conditions account for the remaining 60%. The surveys objective is to define consumer attitudes and buying intentions, while the data are filtered by age, income and region.
A sample of 5 000 households in the United States serves as a basis for the survey. Each month respondents give their opinion based on the answers to five questions: Current business conditions; Business conditions for the next six months; Current employment conditions; Employment conditions for the next six months; Total family income for the next six months. Respondents may answer each question as “positive”, “negative” or “neutral”.
Each of the five questions is given a “relative value”, or the positive responses are divided by the sum of the positive and negative responses. The relative value is then compared against each relative value from the base year (1985). The comparison of the relative values leads to the “index value” for all five questions. These index values are then averaged in order to form the value of the CCI.
In case the index fell more than anticipated, this would have a moderate bearish effect on the US dollar, as lower confidence suggests a lower willingness to spend and, respectively, a slower economic growth. The Conference Board research group is to publish the official index reading at 14:00 GMT.
Bond Yield Spread
The yield on New Zealand’s 2-year government bonds went as high as 2.525% on September 28th, after which it slid to 2.505% at the close to lose 1 basis point (0.01 percentage point) compared to September 25th. It has been the first drop in the past three trading days.
The yield on US 2-year government bonds climbed as high as 0.715% on September 28th, after which it fell to 0.676% at the close to lose 2.4 basis points (0.024 percentage point) compared to September 25th.
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 1.829% on September 28th from 1.815% on September 25th. The September 28th yield spread has been the largest one since September 9th, when the difference was 1.854%.
Meanwhile, the yield on New Zealand’s 10-year government bonds soared as high as 3.355% on September 28th, after which it slid to 3.335% at the close to lose 1 basis point (0.01 percentage point) compared to September 25th. It has been the first decrease in the past three trading days.
The yield on US 10-year government bonds climbed as high as 2.169% on September 28th, after which it slipped to 2.098% at the close to lose 6.8 basis points (0.068 percentage point) compared to September 25th.
The spread between 10-year New Zealand and 10-year US bond yields widened to 1.237% on September 28th from 1.179% on September 25th. The September 28th yield difference has been the largest one since July 15th, when the spread was 1.243%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for NZD/USD are presented as follows:
R1 – 0.6337
R2 – 0.6345
R3 (range resistance) – 0.6353
R4 (range breakout) – 0.6377
S1 – 0.6321
S2 – 0.6313
S3 (range support) – 0.6305
S4 (range breakout) – 0.6281
By using the traditional method of calculation, the weekly pivot levels for NZD/USD are presented as follows:
Central Pivot Point – 0.6341
R1 – 0.6450
R2 – 0.6513
R3 – 0.6622
S1 – 0.6278
S2 – 0.6169
S3 – 0.6106
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