NZD: Demand for New Zealand Dollar is minimal today

The New Zealand Dollar rate is traded slightly upward at the Forex currency market on Thursday as investors’ sentiments do not help to raise interest in the high-risk currencies.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area, and started sideways movement, not giving a clear signal. Stochastic Oscillator does down in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.7960, the pair will go to ? 0.7970 and 0.7990. If upward breakdown does not take place, target for the sales will be the level of 0.7910.
In general, fundamental changes in the economy New Zealand did not take place this morning.

As it was made public earlier, house prices QV in New Zealand increased by 0.7% y/y in September against the rise of 0.1% y/y in August. Meanwhile, the AUD is closely monitoring the situation in China, since potential trade war between China and the USA does not look promising to high-yielding currencies.

Prior statistics showed that GDP in New Zealand increased by 0.1% q/q (+1.5% y/y) in Q2 against +0.9% q/q (+1.6% y/y) in Q1. Commodity prices ANZ in New Zealand fell by 1.3% m/m in September against -1.2% m/m. It is obvious that economy of the country, which is focused on exports, suffers from significant external impact: we are speaking here about global reduction in demand all over the world. Therefore, economy of New Zealand has actually fallen into stagnation: GDP almost stopped growing in the last quarter, which only proves that the decision of the RBNZ not to change the levels of the interest rate was logical. The report disappointed market and currently it is quite possible that regulator will keep interest rates at this level for a long time, at least until the end of spring 2012.

Business activity index in the service sector of the country decreased to 53.2 points in September against preliminary level of 53.8 points. At the same time, 4 out of 5 components of the index have increased, and only one component (warehouse stock) has decreased. Index shows ambiguous data: there have been too many mixed external factors lately.

According to Fitch economists, current account surplus in New Zealand will expand in 1012 and   amount to 4.9%, in 2013-5.5%. At the same time net level of foreign debt of New Zealand is above the level corresponding to its ranking. Finance Ministry of the country noted that rating agencies in the world are too cautious about debt problems and it is still unknown whether the similar actions should be expected from other players in the ranking sector. Earlier the head of the Reserve Bank of New Zealand said that probably financing of the banks in the country can become a problem in 1012. According to Bollard banking system of New Zealand is in a better state now that it was in 2008; however risks from Europe and the U.S. are still there. The rate of NZD is still overvalued.