Yesterday’s trade saw NZD/USD within the range of 0.6333-0.6436. The pair closed at 0.6397, soaring 0.80% on a daily basis and extending gains from Tuesday. The daily high has also been the highest level since August 31st, when the cross registered a high of 0.6481.
At 12:07 GMT today NZD/USD was losing 1.49% for the day to trade at 0.6300. The pair overcame the lower range breakout level (S4), as it touched a daily low at 0.6258 during early Asian session. NZD/USD lost almost 100 pips in the minutes following the Reserve Bank of New Zealands decision to cut borrowing costs by 0.25% to 2.75%, in consonance with the median estimate by analysts.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
New Zealand
Business activity in manufacturing
At 23:30 GMT Business NZ is expected to announce the results from its survey in August, which encompasses purchasing managers in New Zealand’s manufacturing sector. The corresponding Performance of Manufacturing Index came in at a reading of 53.5 in July, slowing down from 55.2 in June. This compound index provides clues over how strong activity in the nation’s manufacturing industry is. Values above the key level of 50.0 are indicative of optimism (expanding activity). Higher activity usually implies potential economic growth and accelerating rate of inflation. Higher readings of the index would support the New Zealand dollar.
United States
Initial, Continuing Jobless Claims
The number of people in the United States, who filed for unemployment assistance for the first time during the business week ended on September 4th, probably fell to 275 000, according to market expectations, from 282 000 in the prior week. The latter has been the largest number of claims since the business week ended on July 3rd, when 297 000 claims were reported.
The 4-week moving average, an indicator lacking seasonal effects, was 275 500, marking an increase of 3 250 compared to the preceding weeks revised down average.
The business week, which ended on August 28th has been the 26th consecutive week, when jobless claims stood below the 300 000 threshold. This continues to support the case labor market conditions in the country follow the path of improvement.
Initial jobless claims number is a short-term indicator, reflecting lay-offs in the country. In case the number of claims met expectations or dropped further, this would have a moderate bullish effect on the US dollar.
The number of continuing jobless claims probably decreased to the seasonally adjusted 2 250 000 during the business week ended on August 28th from 2 257 000 in the prior week. The latter represented a decrease by 9 000 compared to the revised down number of claims, reported in the business week ended on August 15th. This indicator reflects the actual number of people unemployed and currently receiving unemployment benefits, who filed for unemployment assistance at least two weeks ago.
The Department of Labor is to release the weekly report at 12:30 GMT.
Bond Yield Spread
The yield on New Zealands 2-year government bonds went as high as 2.610% on September 9th, or the highest level since August 20th (2.640%), after which it slid to 2.595% at the close to add 2.5 basis points (0.025 percentage point) on a daily basis. It has been the third consecutive trading day of gains.
The yield on US 2-year government bonds climbed as high as 0.765% on September 9th, or the highest level since June 17th (0.766%), after which it fell to 0.737% at the close to remain unchanged 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, shrank to 0.852% on July 10th from 0.869% during the prior day. The latter has been the most notable spread since July 2nd, when the difference was 0.875%.
Meanwhile, the yield on New Zealands 10-year government bonds soared as high as 3.365% on September 9th, or the highest level since August 20th (3.365%), after which it slid to 3.355% at the close to add 4 basis points (0.04 percentage point) compared to September 8th.
The yield on US 10-year government bonds climbed as high as 2.254% on September 9th, or the highest level since August 7th (2.254%), after which it slipped to 2.185% at the close to lose 0.001 percentage point on a daily basis. It has been the first drop in the past three trading days.
The spread between 10-year New Zealand and 10-year US bond yields narrowed to 1.505% on July 10th from 1.613% during the prior day. The July 10th yield difference has been the lowest one since July 3rd, when the spread was 1.478%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for NZD/USD are presented as follows:
R1 – 0.6406
R2 – 0.6416
R3 (range resistance) – 0.6425
R4 (range breakout) – 0.6454
S1 – 0.6388
S2 – 0.6378
S3 (range support) – 0.6369
S4 (range breakout) – 0.6340
By using the traditional method of calculation, the weekly pivot levels for NZD/USD are presented as follows:
Central Pivot Point – 0.6344
R1 – 0.6421
R2 – 0.6558
R3 – 0.6635
S1 – 0.6207
S2 – 0.6130
S3 – 0.5993
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