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1 Nov 2013
NZD/USD in a sideways trend; cross overlooks solid Chinese PMI
FXstreet.com (Athens) – The ">NZD/USD is trading mostly sidelines during Friday, while slightly upwards, as the pair did pay little attention to the beating Chinese data.
The NZD/USD is trading the upper level on the early kick off of the European trading session, while it could be well said that the kiwi is trading mostly sidelines on Friday. Regarding the data released earlier, the Chinese PMI climbed to 51.5 level, making the fastest growth in 18-month time, while the Flash HSBC Chinese PMI soared to a 7-month high (50.9). Despite that China is one of the biggest trading partners of New Zealand, the kiwi found surprisingly little support from the solid Chinese data, overlooking in a way the release as the focus is elsewhere. Elaborating on, as long as the focus will be on macro themes such as the Fed’s tapering and the ECB’s stimulus, the kiwi might well continue to set up a sideways trend path.
Technical Outlook on the NZD/USD
BNZ currency research team suggests that “As you might expect, the NZD and the AUD are found to be the currencies most vulnerable to a Chinese growth shock. Interestingly, the estimates for the NZD are marginally higher than for the AUD, both against the USD and on a TWI basis. A one percentage point downside surprise on Chinese industrial production is estimated to drive a 0.24% decline in the NZD/USD…. Our terms of trade adjusted PPP model puts long-run ‘fair-value’ for the NZD/USD at around 0.7400. This estimate is forecast to fall slightly over the coming year, consistent with our terms of trade forecasts. Based on the analysis above, the risk is that it won’t.”
The NZD/USD is trading the upper level on the early kick off of the European trading session, while it could be well said that the kiwi is trading mostly sidelines on Friday. Regarding the data released earlier, the Chinese PMI climbed to 51.5 level, making the fastest growth in 18-month time, while the Flash HSBC Chinese PMI soared to a 7-month high (50.9). Despite that China is one of the biggest trading partners of New Zealand, the kiwi found surprisingly little support from the solid Chinese data, overlooking in a way the release as the focus is elsewhere. Elaborating on, as long as the focus will be on macro themes such as the Fed’s tapering and the ECB’s stimulus, the kiwi might well continue to set up a sideways trend path.
Technical Outlook on the NZD/USD
BNZ currency research team suggests that “As you might expect, the NZD and the AUD are found to be the currencies most vulnerable to a Chinese growth shock. Interestingly, the estimates for the NZD are marginally higher than for the AUD, both against the USD and on a TWI basis. A one percentage point downside surprise on Chinese industrial production is estimated to drive a 0.24% decline in the NZD/USD…. Our terms of trade adjusted PPP model puts long-run ‘fair-value’ for the NZD/USD at around 0.7400. This estimate is forecast to fall slightly over the coming year, consistent with our terms of trade forecasts. Based on the analysis above, the risk is that it won’t.”