NZD: New Zealand Dollar is rapidly descending to the local lows

The New Zealand Dollar rate is traded downward at the Forex currency market on Thursday morning- sales of the currency have intensified because investors are unwilling to take risk due to the problems of the USA and Europe. National data of New Zealand also adds fuel to the fire.

Forex forecast: MACD indicator for the pair NZD/USD is in the negative area and goes down, giving a sell signal.  Stochastic Oscillator is also going down, sliding into the oversold zone and maintaining a sell signal.

Forex recommendations: in case of breakdown at the level of 0.7950, the pair will go to 0.7930 and 0.79000. It became known today that GDP in New Zealand increased 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.

Therefore, there is actually stagnation in the economy of New Zealand: GDP has almost stopped rising last quarter, which proves that decision of the RBNZ do not change interest rate was logical. The report has 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. 

Levels of exports do not support economy of New Zealand: the index decreased by 0.5% last quarter, while the share of imports increased by 1.7%. As it became known earlier, consumer confidence index ANZ in New Zealand fell to 112.6 points in September against the level of 113.3 points in August. It is clear that macro-economy does not provide any support to the NZD. In addition, it became known that purchasing manager index PMI BNZ in New Zealand fell to 52.9 points in August against the previous level of 53.2 points.

The index had been declining for the third consecutive month which demonstrates slowdown in the sector. The data released earlier showed that current account balance in New Zealand amounted to –NZ$2.0 billion in Q2 against preliminary estimate of –NZ$1.5% billion. It is obvious that economy of the country suffers from the global decline in demand – New Zealand is the country which is focused on exports and supplies dairy products vegetables, wool, therefore much less money will come to the state treasury.

According to statistics released yesterday activity index on the service sector of New Zealand fell by 0.6 points in August, to the level of 53.9 points. At the same time, consumer confidence Westpac in New Zealand remained at the level of 112.0 points in Q3 versus similar level in Q2. CPI in New Zealand rose by 1.0% q/q (+5.3% y/y) in Q2 against the forecast of growth by 0.8% on quarterly basis.

This was another positive feature in the outline of New Zealand economy. It is worth noting that number of permits to construct in New Zealand decreased by 1.4% m/m in July against the forecast of +3.0%. Activity in the construction sector of Australia was at the level of - 6.6 q/q in Q2; which agreed with the revised data in Q1.