NZD: New Zealand Dollar is being corrected after reaching new highs

Forex currency market the New Zealand Dollar rate is being corrected on Thursday, following the decision of the Reserve Bank of New Zealand on the interest rate.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD and goes upward due to high volumes, giving a pair buy signals. Stochastic Oscillator tends to come out of the overbought zone today, starting a pair sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 0.8030 the pair will go to 0.8010 and 0.7980. If the level of 0.8080 is exceeded, the pair will move to the previous highs of 0.8108.

It became known today that Reserve Bank of New Zealand has made a decision to leave interest rate at the low level of 2.5%, clarifying that the rate is not going to be raised.

Regulator stressed in the follow-up comments that high rate of the New Zealand Dollar is undesirable, since it has a negative impact on the economy.
Statistics released earlier was mixed: index of houses prices REINZ increased by 0.5% in March against preliminary forecast of growth by 2.3%; while sale of houses reduced by 5.1% last month against preliminary level of -10.5%. In addition prices for food rose by 0.3% in March against preliminary target of -10.5%. In addition prices for food increased by 0.3% in March against the preliminary target of 0.1%. Earlier the country reported that trade surplus was positive for the first time in the last 8 months. High raw material prices which have been maintained in the world market became a catalyst for this, as well as the growth of export levels of timber and dry milk. Exports increased by 17% y/y in February; imports – by 23% y/y, to the level of 3.86 billion of NSD. Exports in New Zealand amounts to about 30% of the total GDP level and the increase in this article will have a positive impact on the national economy.

In addition it also became known that level of business confidence in New Zealand declined by 27% in QI, as per NIESR estimates, against the level of +8 points in QIV.

Statistics released earlier showed that inflation in New Zealand rose by 0.8% on quarterly basis (+4.5% y/y) in QI against the forecast of growth by 1.0% on quarterly basis. Therefore, CPI in the country turned out to be weaker than expected, which indicates that pace of economic recovery is slow.
 The reaction of the NZD on the decision of the RBNZ is quite logical. 

 

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