NZD: New Zealand Dollar grows, following in market steps

At the Forex currency market the new Zealand rate goes up on Tuesday amid general optimism at the market and at the same time ignoring poor domestic news.

Forex forecast: MACD indicator is in the negative area for the pair NZD/USD and it is moving along the signal line, not forming a clear signal. Stochastic oscillator is giving a pair buy signal, coming out of the oversold zone.

Forex recommendations: if bullish sentiments for the pair intensify and in case of breakdown at the level of 0.7540, the pair will go to 0.7575 and 0.7610.

Meanwhile, as soon as domestic news from New Zealand is made public, it becomes obvious that it is not the occasion for rejoicing.

Thus, today Ministry of Finance brought down economic growth forecast for the current and the next fiscal years. In particular, estimate of GDP growth for the next fiscal year which starts on 1 June was brought down to 2.2% against the previous target level of 3.2%. In 2012 monetary politicians expect economic growth to 3.4%; however later, in 1015, economic growth in New Zealand will slow down again to - 2.7%

In addition, it is assumed that there will be a budget deficit in the country, which is predicted to increase from the current 14.1% of GDP to 28.5% of GDP by June 2015.

Interest rate of the Reserve Bank of New Zealand is now at the level of 3.0% per annum. Commenting the last RBNZ meeting the regulator noted that the rate of the monetary policy tightening is expected to be moderate in the next two years, since the earthquake which happened in the country recently (and which was the strongest over the last 80 years) had a significant impact on the state of the national economy.

According to the head of the RBNZ Mr. Bollard: “The most reasonable at the moment will be to keep rates low until the moment when economic recovery becomes steadier and inflationary pressures will start to demonstrate sings of consolidation. In the next two years interest rate will rise in a more moderate pace than it had been expected earlier”.

It became known earlier that unemployment rate in New Zealand decreased to 6.4% in QIII against the previous level of 6.7% in QII. At the same time the change in the employment rate in QIII amounted to +1% against expectations of +0.5%.