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Building Consents and NBNZ Business Confidence are the top events this week. Here’s an  outlook  for the events in New  Zealand, and an updated technical analysis for NZD/USD.

Current account deficit narrowed more than expected to a seasonally adjusted -0.10B, from -3.63B in the previous quarter. Economists expected current account deficit to widen to 3.90B an overall positive figure. New Zealand’s long standing current account deficit is a constant concern for ratings agencies Will the deficit continue to decrease?

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

Let’s Start

  1. Trade Balance: Sunday, 22:45. New Zealand’s trade balance surplus jumped To a record high of NZ$1.11 billion in April while forecasts suggested a surplus of NZ$600 million. Exports expanded by a monumental 24% the highest in almost 20 years. A decrease to NZ$1.00 billion surplus is expected.
  2. Building Consents: Wednesday, 22:45. The number of new building consents in New Zealand dropped in April by a seasonally adjusted 1.6% reflecting the strenuous recovery after the Christchurch earthquake. The previous month reading showed a 2.0% gain. However this event is volatile because the number of apartments authorized is not fixed. Nevertheless there are signs of recovery in the housing market. A small rise is predicted.
  3. NBNZ Business Confidence: Thursday, 1:00. New Zealand’s business confidence was regained in May climbing to 38.3 from 14.2 in the previous month. A boost in market activity is expected followed by a rise in prices an overall promising future. Another increase is expected now.

* All times are GMT.

NZD/USD  Technical  Analysis

The kiwi traded in a relatively narrow range in the past week, rising to just below 0.82 and finding support at around 0.81. It eventually closed at the same spot as last week.

Technical levels from top to bottom:

The new all time high of 0.83 is now the top line. It is also a round number. Above this, it is uncharted territory. The previous all-time high of 0.8215 is still important just below, as it worked as resistance for another week in a row..

The 81 line, followed by 0.8080 also provided resistance in the past, but is now support. once again. Although it is weaker now, it will be be watched at the beginning of the week.

The previous post crisis high of 0.7975 remains an important line, remaining very distinctive, separating ranges. The importance of this line was seen as the pair bounced off it.

100 pips lower, we meet 0.7875, which was support in 2010, and will be a line of support on a fall of the pair.  0.7825 is important support after capping the pair at the beginning of the year, and working as support twice in the past month. It’s somewhat weaker now.

0.7746 worked as support in November and as resistance in January and proved to be important support now. Further support is found at the 0.7655 peak seen in February.

0.7523 is a veteran resistance line, that worked as strong support in January and remains important. 0.74 was a line of support twice in during the fall and is the next line.

I am bearish on NZD/USD.

The expected drop in commodity prices as a result of the end of QE2 in the US, together with a slowing China, are likely to send the pair lower.

Further reading: