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.

The biggest story was the ongoing recession in Britain, that supplied a huge drop for the Pound on Friday.

Forex trading began with new dollar weakness. Many currencies regained against the dollar after losing ground on Friday. Mostof them are currently within levels seen last week: EUR/USD is under 1.50, USD/CHF above 1.0120 (no parity yet), USD/CAD above 1.03, etc. GBP/USD is higher than last week, at 1.6420, but it has already seen those levels not so long ago.

Alan Bollard didn’t surprise with the decision to leave the rates unchanged. Here’s the negative sentence from the statement:

Non-Farm Payrolls, as well as a big number of other important indicators, didn’t move most currencies out of their ranges. Only AUD/USD made a breakout. What will move the markets this week? Let’s see what’s up:

Australian HIA New Home Sales starts the day. Last month, this figure fell by 5.7%. In New Zealand, NBNZ Business Confidence is an important release that will give a broad view over the economy.

1. Trade Balance: New Zealand usually enjoys a surplus in its export oriented economy, yet the size of this surplus isn’t stable. In the last months, this surplus was higher than expected each time. After rising to 858 million, it’s now predicted to squeeze back to 214 million. This is the first event of the week, published on Monday at 22:45 GMT.
2. Building Consents: Published on Tuesday at 22:45 GMT, this figure reflects the future construction works, something that affects the whole economy. This building permits release is important despite being very volatile. Last time, it recorded a rise of 3.5%, and also figures from previous months were revised upwards. This time, economists expected a drop in building consents, a drop of 4.8%.
3. NBNZ Business Confidence: Published on Wednesday at 3:00 GMT, quite close to the Building Consents release. In the last two months, kiwi businesses have shown optimism according to this survey. The index was positive for two months in a row after many badly negative numbers. Last month it scored 5.5 points. Will it remain negative?
4. Rate decision: The RBNZ meets to decide upon a new interest rate. Together with Australia, New Zealand holds an interest rate that isn’t close to zero. The Official Cash Rate is at 2.5%, and isn’t expected to change this time. The accompanying RBNZ Rate Statement will draw attention. Will they express optimism like the BOC? Are they taking the better figures seriously, or are they dismissing them? The specific wording of the statement is critical for NZD/USD.

NZD/USD Technical Analysis

Non-Farm Payrolls closed the week with a big surprise. The dollar won the wild forex trading week. Will the dollar continue its comeback this week? OR will the general long term dollar decline continue?

On March 11th, I wrote that AUD/USD is squeezed in a narrowing channel, and that the break is close. The uptrend support and downtrend resistance were broken well before the lines were about to meet (end of March).

Australia starts the day with the important figure of Home Loans expected to rise by 4%, less than 6.4% in the previous month.