NZD: Long positions for New Zealand Dollar are not justified

The New Zealand Dollar rate continues to rise at the Forex currency market on Wednesday.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, and is going up, giving a buy signal; volumes are high.  Stochastic Oscillator remains in the overbought zone; however, giving a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8750, the pair will go to 0.8765 and 0.8780.

The pair could drop to 0.8600 as part of correction.As it was made public today, index of business confidence in New Zealand increased to 47.6 points, as per NBNZ estimates, against the level of 46.5 points in May. Index of inflationary expectations fell to 3.15% (previously: 3.20%) and indicator of prospects with the account of activity increased to 43.7 points last month (38.7 points earlier).It became known earlier that business sentiment NZIER in New Zealand rose to 27 points in Q2 against -27 points earlier.

In general, it is a positive factor.Statistics released earlier showed that GDP in New Zealand rose by 0.8% on quarterly basis (+1.4% y/y) in Q1 against the forecast of growth by 0.3% q/q (+0.5% y/y). The indices have been very favourable, which supports the NZD. It is possible that the data will be less positive in Q2; however in general, the trend will remain the same, which is favourable for the pair NZD/USD in the long term.

According to statistics released on Tuesday, trade balance in New Zealand increased by NZ$230 billion in June against the forecast of NZ$400 billion. Slowdown in surplus was logical in June: volume of growth rate in imports and exports fell last month. Thus exports increased by 4.5% in Q2, to NZ$12.2 billion; imports dropped by 1%, to the level of NZ$11.8 billion.

Exports to China and Australia fell sequentially: to +1.3% y/y (+24.2% y/y earlier) and 1.2% y/y (+4.7% y/y earlier) respectively.CPI in New Zealand rose by 1.0% q/q (+5.3% y/y) in Q2 against the forecast of growth by 0.8% on quarterly basis. It is one more positive characteristic of the economic status in New Zealand.There is speculation in the market that the Reserve Bank of New Zealand is looking closely at market’s reaction to the measures to resolve debt crisis in Europe which might imply a disposition to raise the level of the interest rate at the meeting next week.

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