NZD: New Zealand Dollar has shifted many-week highs

The New Zealand Dollar rate continues the growth which started earlier this week at the Forex currency market and has already shifted the highs to 0.8319.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, and goes down, giving a sell signal; volumes are below average. Stochastic Oscillator reversed in the neutral zone and started to rise, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 0.8300, the pair will go to 0.8310 ? 0.8340.

If upward breakdown does not take place, the pair will consolidate close to the current levels.Stabilized external background remains the main driver for the NZD. As it became known today, construction permits in New Zealand increased by 2.2% m/m in May against the forecast of growth by 3.2%.

Economic growth of the country is still complicated.According to the data released last week, consumer confidence index Westpac in Australia fell by 2.6% m/m, to 101.2 points in June against preliminary forecast of decline by 1.3%, to 103.9 points. In addition, a number of begun construction in Australia increased by 3.1% q/q in Q1, while the forecast had been -0.6%.

It became known yesterday, that inflation expectations have remained at the level of May at 3.3% q/q in June. The data of last week showed that current account balance amounted to -NZD$0.097 billion in Q1 against the forecast of -NZD$0.900 billion. Note that ratio of the deficit to GDP totaled to -4.3% in Q1 this year against the forecast of -4.4% and the level of -2.3% in Q4 last year.

Index of trading conditions in Q1 increased to a 37 - year highs in Q1, demonstrating the growth of 0.9% on quarterly basis (+6.8% y/y), which could be one of the signs of economic recovery in New Zealand, as it reflects changes in prices for exports and imports.As it became known this week, trade balance in New Zealand was at the level of NZD$605 billion in May against the forecast of NZD$1000 billion. This is a negative data, because decline in the trade balance will indicate decline in the level of exports later, which will be the impact of cooling in the Chinese economy.

Earlier, 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 to 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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