Friday’s trade saw NZD/USD within the range of 0.6295-0.6392. The pair closed at 0.6386, soaring 0.46% on a daily basis, while extending gains from Thursday. The daily high has been the highest level since September 21st, when the cross registered a high of 0.6405. In weekly terms, NZD/USD lost 0.17%, marking the first drop in the past three weeks.
At 13:25 GMT today NZD/USD was losing 0.85% for the day to trade at 0.6331. The pair tested the lower range breakout level (S4), as it touched a daily low at 0.6328 at 13:27 GMT.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
United States
Pending Home Sales
The index of pending home sales in the United States probably rose 0.2% in August compared to July, according to the median estimate by experts, following another 0.5% increase in the prior month.
In annual terms, the index of pending home sales rose 7.2% in July, or at the slowest pace since December 2014, when a climb rate of 6.1% was reported.
When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale and is currently the most accurate indicator regarding the US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.
In case pending home sales increased more than anticipated in August, this would have a moderate bullish effect on the greenback. The National Association of Realtor’s (NAR) will release the official index value at 14:00 GMT.
Correlation with other Majors
Taking into account the week ended on September 27th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:
NZD/USD to EUR/USD (0.5485, or strong)
NZD/USD to USD/CAD (0.4023, or moderate)
NZD/USD to USD/JPY (0.3139, or moderate)
NZD/USD to USD/CHF (-0.0212, or very weak)
NZD/USD to AUD/USD (-0.1831, or weak)
NZD/USD to GBP/USD (-0.4063, or moderate)
1. During the examined period NZD/USD moved strongly in one and the same direction with EUR/USD.
2. NZD/USD moved almost independently compared to USD/CHF during the past week.
3. NZD/USD moved to a moderate extent in one and the same direction with USD/CAD and USD/JPY during the period in question, while moving to a moderate extent in the opposite direction compared to GBP/USD.
Bond Yield Spread
The yield on New Zealand’s 2-year government bonds went as high as 2.530% on September 25th, or the highest level since September 16th (2.540%), after which it slid to 2.515% at the close to add 3.5 basis points (0.035 percentage point) on a daily basis, while marking a second consecutive trading day of gains.
The yield on US 2-year government bonds climbed as high as 0.743% on September 25th, or the highest level since September 17th (0.815%), after which it fell to 0.700% at the close to add 1.2 basis points (0.012 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, widened to 1.815% on September 25th from 1.792% during the prior day. The September 25th 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 3.360% on September 25th, or the highest level since September 17th (3.395%), after which it slid to 3.345% at the close to appreciate 3.5 basis points (0.035 percentage point) compared to September 24th, while marking a second straight trading day of gains.
The yield on US 10-year government bonds climbed as high as 2.198% on September 25th, or the highest level since September 22nd (2.198%), after which it slipped to 2.166% at the close to add 3.8 basis points (0.038 percentage point) on a daily basis.
The spread between 10-year New Zealand and 10-year US bond yields shrank to 1.179% on September 25th from 1.182% during the prior day. The September 25th yield difference has been the lowest one since September 23rd, when the spread was 1.124%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for NZD/USD are presented as follows:
R1 – 0.6395
R2 – 0.6404
R3 (range resistance) – 0.6413
R4 (range breakout) – 0.6439
S1 – 0.6377
S2 – 0.6368
S3 (range support) – 0.6359
S4 (range breakout) – 0.6333
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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