The New Zealand dollar has managed to claw back some of it’s earlier losses as the strong dollar starts to wane, and as economic data out of New Zealand continues to be a mixed back but mostly bullish. Two ANZ surveys released today showed the New Zealand economy picking up as commodity prices lifted to 3.2% (prev 2.0%). At the same time the ANZ truckometer was released which acts as a proxy for GDP readings and it was strongly up 6.7% m/m (prev -5.7%), which shows that expectations for GDP in the coming quarter are slightly weaker, but the following quarter is expected to see an overall lift in GDP for the economy. For many this will be a positive sign for the New Zealand economy, but for the Reserve Bank of New Zealand they will be looking to make sure that house prices are kept in check and that if the economy starts running red hot it may be time to tighten interest rates in order to keep inflation in check.
Technically the NZDUSD has been struggling lately as volatility continues to play havoc for traders trying to trade key levels. The main level being 0.73118, which so far has had a number of attempts to close above it on the daily chart, but all failing in the last fortnight. However, with pressure building it certainly could be a case of a breakout and the NZDUSD would likely run in such a scenario and looking for higher highs. In this case 0.7475 being the next level of resistance traders are likely to find, unless we see some sort of major economic data which boosts the NZ economy strongly.
Across the pacific ocean in the USA we have seen US data recently seem to lack any real power in the marketplace with non-farm payrolls being much weaker than anticipated at 151k (180k exp), this in turn lead to a spike in the unemployment rate to 4.9%. So far the USD has suffered slightly for this, but for the most part people still expect that not even a blip in non-farm payroll can prolong the odds of an interest rate rise in the USA. Expectations around this continue to build, and if we see any further movement in unemployment claims this may add weight to the theory that something may be stifling the labour market at present. For the S&P 500 this weakness followed by bets on a rate hike have stopped it in its tracks and it’s currently ranging as a result.
Resistance at 2185 continues to stop any sort of momentum for the S&P 500 and I would be surprised if the recent push higher can gain any sort of traction to push through at this stage. As the S&P dips lower it’s playing between two key support levels at 2168 and 2152, any drop to the 2152 support level is likely to find the 50 day moving average which has acted as dynamic support in the past. However, with the technical build up, it’s still possible for the S&P 500 to fall further as the bets for rate hikes increase.