NZD/USD Weekly Fundamental Analysis, May 4-8, 2015 – Forecast

Weekly Analysis and Recommendation:

The NZD/USD is trading at 0.7543 after the Reserve Bank kept interest rates on hold and dairy prices moved a bit upward.  The New Zealand dollar is heading for a 0.2 percent weekly decline against the greenback as markets digest the Reserve Bank’s formal shift to an easing bias, and ahead of next week’s monetary policy review in Australia.

Investors are assessing the prospects of lower rates in Australia and New Zealand as tepid inflation provides scope for the nations’ respective central banks to keep stimulating their economies with lower rates. New Zealand’s Reserve Bank kept its key rate at 3.5 percent on Thursday, while opening up the possibility of a rate cut if inflationary pressures come in below expectations, while traders are pricing in a 62 percent chance of a cut by the Reserve Bank of Australia when it reviews its policy on Tuesday.

New Zealand export log prices fell to a seven-month low as high inventories on Chinese ports dent demand in the country’s largest market.

The average wharf gate price for New Zealand A-grade logs fell to $94 a tonne in April, from $106 a tonne in March, the lowest level since September, according to AgriHQ monthly survey of exporters, forest owners and saw millers. The AgriHQ Log Price Indicator, which measures average log prices weighted by grade, fell to 93.29 from 96.58 in March.

ForexTraq provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

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Major Economic Events for the week that you should be monitoring:

Time Cur. Event Actual Forecast Previous
Monday, May 4, 2015
  CNY HSBC Manufacturing PMI (Apr) 49.2
  EUR German Manufacturing PMI (Apr) 51.9 51.9
Tuesday, May 5, 2015
  AUD Interest Rate Decision (May) 2.00% 2.25%
  GBP Construction PMI (Apr) 57.5 57.8
  USD ISM Non-Manufacturing PMI 56.5 56.5
  NZD Employment Change (QoQ) (Q1) 0.8% 1.2%
Wednesday, May 6, 2015
  AUD Retail Sales (MoM) (Mar) 0.4% 0.7%
  GBP Services PMI (Apr) 58.5 58.9
  USD ADP Nonfarm Employment 198K 189K
  CAD Ivey PMI (Apr) 47.9
Thursday, May 7, 2015
  AUD Employment Change (Apr) 5.0K 37.7K
Friday, May 8, 2015
  CNY Trade Balance (Apr) 3.08B
  USD Nonfarm Payrolls (Apr) 213K 126K
  USD Unemployment Rate (Apr) 5.4% 5.5%
  CAD Employment Change (Apr) 28.7K

Government Bond Auctions

Date Time Country

May 05 11:15 Austria Holds RAGB bond sale

May 06 11:03 Sweden Holds bond auction

May 06 11:30 Germany Eur 5bn Jun 2017 Schatz

May 07 10:30 Spain Auctions Bonos

May 07 11:10 France Auctions OATs

May 07 11:10 Sweden Holds inflation-linked bond auction

May 08 12:00 Norway Details bond auction on 12 May

May 08 17:30 Italy Announces details of BTP/CCTeu on 13 Ma




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