2016-11-01 10:53:07

The rise in the Australian dollar has provoked the growth of other commodity currencies, including the NZD, against the USD. As we know, today the RBA has left interest rate unchanged at the level of 1.5%. The RBA has stated that given the current data and after the monetary policy easing at the meetings in May and in August the Board of the Bank decided that the keeping existing policy would contribute more to the further economic growth and achievement of the target inflation level. The rise in the NZD today was caused by the growing commodity prices. According to today’s data from the RBA, index of commodity price, which is a leading indicator of changes to the prices for export, has grown by 16% in October on the annual basis. The change to this price index has a strong impact on the GDP and exchange rate of the national currencies of the countries, which deal with the exports of commodity. New Zealand is one of such countries, as the most important item of exports in New Zealand is the milk powder and other dairy products.

The New Zealand dollar is supported by the rise in the foreign trade in New Zealand amid the fall in the world supply of dairy products and almost inevitable growth in prices of the dairy products, which is the main export commodity of New Zealand.

Interest rates in New Zealand remain relatively high, despite probability of the decline in future. Current interest rate in New Zealand is at the level of 2%, which is one of the highest levels in the world among the countries with the advanced economy. This fact attracts investors as the purchase of the NZD is a safe transaction brining steady income, The NZD is also attractive for the traders using "carry-trade" strategy when more expensive currency is bought at the expense of the cheaper one.

Although the Reserve Bank of New Zealand may lower interest rate in November at the meeting, scheduled for November 9 and in the first 6 months 2017, the New Zealand dollar maintains position in the market and the pair NZD/USD is in the steady uptrend.

Today’s news will include the release of the US data for October in the period of 17:00 – 18:00 (GMT+3) ISM index of gradual acceleration of inflation (forecast is 54), ISM index of business activity in the manufacturing sector (forecast of 51.5).

If the data happens to be below the forecast, the pair NZD/USD will receive additional upward momentum. Otherwise, the USD will go up.

After 18:00 - price index for dairy products will become known. Usually this news increases volatility in the NZD. At the auction in the past two weeks the price of the dairy products has slightly increased. According to the Global Dairy Trade, price index for dairy products has grown by 1.4%.NZD/USD: supply of the dairy products in the world has dropped.  Fundamental analysis for 01/11/2016