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NZ Dollar Gains With Local Business Confidence, Fed In Focus

NZ Dollar Gains With Local Business Confidence, Fed In Focus

David Cottle, Analyst


What's on this page

New Zealand Dollar, ANZ Business Confidence, Talking Points:

  • NZD/USD spiked up as confidence beat forecasts
  • Business remains subdued overall, but there have now been consistent improvements in sentiment
  • Gains were quite short-lived in a market focused on the year’s last US monetary policy call

Fourth-quarter technical and fundamental forecasts from the DailyFX analysts are out now.

The New Zealand Dollar got a Tuesday boost from news that businesses in its home country were feeling better about their prospects than they had for the previous eight months.

December’s business confidence index from the Australia and New Zealand Bank came in at minus 24. Now this is hardly champagne territory. A clear balance of firms is still downbeat. However, the survey was far better than November’s minus-37 print and it also continued the run of improvement seen since August’s nadir.

This measure has been in negative territory for fifteen months. Indeed, confidence became such a problem that the New Zealand government set up an advisory council back in August to see what could be done to lift the gloom. And it is notable that confidence levels remain well above the levels seen last summer even if, overall, they remain subdued. The activity outlook sub-index rose to 13.6. its best showing for seven months.

NZD/USD snapped up quite sharply on the release

Sharp Bounce: New Zealand Dolalr Vs US Dollar, 5-Minute Chart

However, its gains were short lived in a foreign exchange market hunkered down for the final US monetary policy decision of the year, which will come on Thursday morning New Zealand time.

NZD/USD’s daily chart shows the pair still well above the downtrend which characterized much of this year. While New Zealand interest rates remain at record lows, a rethink about how much further US rates might rise has supported the Kiwi in the last couple of months.

New Zealand Dollar Vs US Dollar, Daily Chart

However, NZD/USD appears to have topped out for the moment at least, at the peaks of early December. A dovish performance from the Fed this week may give it a fillip into year end

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.