NZD: New Zealand Dollar is losing positions because of decline in interest to risk

At the Forex currency market the New Zealand Dollar rate goes down on Wednesday along with major currency pairs due to decline of investors’ interest to risk.

Forex forecast: MACD indicator for the pair NZD/USD is going down in the negative area and is giving a sell signal; volumes are maximal. Stochastic Oscillator has left oversold zone and is giving a clear buy signal.

Forex recommendations: in case of breakdown at the level of 0.7595, the pair will go to 0.7600 and 0.7620.  There is a high probability that aggressive sellers will be back in the pair.

 Statistics of the middle of the week showed that permits to construct in new Zealand increased sharply by 10,0% in October against the fall of 1.3% y/y in September. The data is positive; however the NZD has ignored this information.

It became known this week that the party of the current prime-Minister John Kay won the elections, which supported growth of the NZD, as investors have received a confirmation that current monetary policy will be pursued.

It became known earlier that trade balance in New Zealand was at the level of –NZ$282 million in October against the level of NZ$784 million in September. The index remained in deficit last month although higher than the forecasts of economists. Volumes of export increased by 5.3% (NZ$3.9 billion on annual basis in October and imports rose by 8.9% y/y due to demand for industrial production.

Statistics released this week showed that business confidence NBNZ amounted to +18.3 points in November against the level of +13.2 points in October. According to business estimates business outlooks shall become better soon, at least as indicated by statistics. As per previous statistics, volume of retail sale in New Zealand increased by 2.2% q/q in Q3 against preliminary level of growth of 1.0%. In addition, activity index in the service sector BNZ decreased to 50.6 points in October against preliminary level of 52.9 points. The data released earlier showed that annual inflationary expectations in New Zealand declined to 2.72% in Q4 against the level of 2.94% a quarter earlier. This became another indication that economy of the country decelerates its growth rates.

GDP in New Zealand rose by 0.1% q/q (+1.5% y/y) in Q2 against the level of +0.9% q/q (+1.6% y/y) in Q1. Thus New Zealand economy is actually in the state of stagnation. GDP almost stopped growing in the last quarter, which only proves that the decision of the RBNZ not to change the levels of the interest rate was logical. The report disappointed market and currently it is quite possible that regulator will keep interest rates at this level for a long time, at least until the end of spring 2012.