NZD: New Zealand Dollar declines again

At the Forex currency market the New Zealand dollar rate declines on Wednesday.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, however it started to go down, giving a sell signal. Stochastic Oscillator descends in the neutral zone, giving a sell signal.

Forex recommendations: in case of breakdown at the level of 0.8130 the pair will go to 0.8110 and 0.8080.  If downward breakdown does not take place the pair will consolidate close to the current levels.

As it became known in the middle of the week, volume of retail sales in New Zealand rose for the first time in the last three quarters in Q1, which is a  good sign of the economic recovery. Thus, indicator increased by 0.9% q/q which agreed with the forecast, excluding inflation.

Meanwhile, low interest rates provide good support to the economy, however growth in domestic demand can provoke the rise in the rates before the end of this year.
It is worth noting also that consumer confidence ANZ increased to 112.5 points in June against the preliminary level of 103.3 points.
Agency Fitch stated that New Zealand economy has demonstrated stabilization of the budget; however it is not sufficient yet to revise the rating outlook of the country from the current “negative”. Moody’s noted that authorities of New Zealand have been doing a good job, and take every step to bring economy to its normal state.

Note: that budget deficit in New Zealand amounted to NZ$10.17 billion within 9 months, as of 31 March, which had been 15% higher than expected by economists. Terms of trade index in New Zealand rose to the 37-year highs in QI, demonstrating growth by 0.9% (+6.8% y/y). It could be one of the indications that New Zealand economy is recovering as it reflects changes in prices for exports and imports. We would like to point that the index is strongly correlated with the index of living standard in the country which is a positive sign.

Last week, the Reserve Bank of New Zealand decided to keep interest rate unchanged at the minimum of 2.50% per annum, since it is going to continue its work on improvement in economic system. According to the head of the RBNZ, NZD has been overvalued because of high export prices for raw materials, therefore, national currency rate, which has increased over the last two months, has adverse impact on the rebalancing of the economy in New Zealand. Bollard expressed confidence that decline of the NZD will be gradual because currency intervention will not be able to change the trend. 

 

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