NZD: New Zealand Dollar continues free fall

At the Forex currency market the New Zealand rate declines on Friday, continuing to move in the descending channel for the fourth consecutive day. Sales of the NZD have logical explanation. 

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and is going down, confirming a sell signal for the pair. Stochastic Oscillator is moving towards oversold zone today, maintaining a pair sell signal.

Forex recommendations: in case of breakdown at the level of 0.7360, which is the lowest one, traders’ targets will be the levels of 0.7310 and 0.7260.

Now the New Zealand Dollar is close to the lows of 10 weeks and starting from February the NZD has subsided for more than 5 figures. The reason for the NZD sales still remains the view of the Prime Minister of the country John Key who said in his interview with Bloomberg News that he would have approved the decision of the Reserve bank of New Zealand to reduce interest rate from the current 3% - the next meeting of the RBNZ is scheduled for 10 March. Politician did not rule out that effect of the earthquake which took place in the South of New Zealand in February can contribute to the rollback of the national economy into the state of recession. 

Therefore, there are strong speculations at the market regarding the rate of the NZD, which put pressure on the NZD and force it to test new local lows.

We would remind that at the last meeting in January the Reserve Bank of New Zealand made an expected decision to keep interest rate at the previous level of 3.0% per annum. The Central Bank showed adherence to maintain monetary policy unchanged. In the follow-up comments, the head of the RBNZ, Bollard stressed that the rates will sequentially increase over the next two years.

The data on New Zealand, released on Friday was mixed: index of industrial activity rose to the level of 53.7 in January against 53.2 in the previous period; producer prices at exit/entrance for quarter IV: +0.9%/+0.2% respectively; consumer confidence index ANZ increased to 108.2 in February against 117.1 in January. In addition, Finance Minister of New Zealand said a week earlier that strong domestic currency did not support national economy, and consequently economy looks not quite competitive.

 

 

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