David Song of DailyFX discusses the Fed, China’s landing, Spain’s edge over Italy, Britain’s safe haven status and one currency which still has a potential, even after making big gains, in the interview below.

The kiwi soared to its highest level in 26 years reaching $0.8216 after rising demand for New Zealand assets and increasing activity in the market. This may lead RBNZ to consider rate hike before the end of the year.

Last week New Zealand’s central bank maintained its benchmark rates announcing they will continue doing so to help recovery following the devastating Christchurch earthquake until next year. The economy is suffering from growing oil prices and high currency freezing market activity.

Finance Minister Bill English announced last week that New Zealand’s return to budget surplus will be delayed by one year to 2015/16 instead of 2014/15 as was projected in last year’s budget due to the cost of the devastating earthquake in Christchurch roughly estimated at NZ$15 billion.

The RBNZ, led by Alan Bollard, decided to leave the Official Cash Rate at 3%. This followed two consecutive rate hikes. Alan Bollard warned that this tightening cycle would be easier than the previous one – meaning that rate hikes would stop very short of the 8.25% rate they reached before the financial crisis – a rarity in the Western world.

In the US, Building Permits an indicator of future activity is expected to stay low following 0.57M permits issued in the previous month. A small increase to 0.58M is expected now.

CPI is the key event in the kiwi’s week. Here’s an outlook for the events in New Zealand, and an updated technical analysis for NZD/USD.

NZD/USD  daily chart with support and resistance lines marked. Click to enlarge:

Gross Domestic Product in New Zealand was expected to rise by 0.5%, and it surprised with a rise of 0.6%. It’s important to note that also the GDP for Q4 was revised to the upside – 0.9% instead of 0.8%, making the current rise even stronger.

Alan Bollard, governor of the Royal Bank of New Zealand, didn’t disappoint traders, as he followed Australia and Canada. The Official Cash Rate in New Zealand is now 2.75%, up from 2.50%. This raise will soon be translated into floating mortgage rates, cooling the real estate market and taming inflation. This is only the first step:

In the US, Unemployment Claims are expected to continue decreasing from 453K to 447K which is a good sign for the US market.