NZD: Trades for New Zealand Dollar went below the lows of September

At the Forex currency market the New Zealand Dollar rate remains under strong downward pressure in the middle of the week. Investors are not going to enter into long positions in the high-yielding currencies because of increasing risks.

Forex forecast: MACD indicator for the pair NZD/USD is going down in the negative area and is giving a sell signal; volumes are increasing. Stochastic Oscillator remains in the oversold zone maintaining a similar signal.

Forex recommendations: in case of breakdown at the level of 0.7485, the pair will go to 0.7470 and 0.7460. If downward breakdown does not take place, the pair will consolidate at the achieved levels.

Economic situation in New Zealand remains unchanged.

The data released yesterday showed that annual inflationary expectations in New Zealand fell to 2.72% in Q4 against the level of 2.94% a quarter earlier; which was another indication that economic growth in the country is decelerating.

As it became known this week volume of retail sales 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.

It will be difficult for the RBNZ to decrease rate in the current economic situation : regulator keeps on pursuing quite aggressive monetary policy.

According to previous data, 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.