Current Account and GDP are the major events this week. Here’s an outlook for the events in New Zealand, and an updated technical analysis for MZD/USD.
New Zealand’s budget deficit will be worse than the government’s earlier forecast due to slow economic recovery, limited tax receipts and the worst earthquake in 80 years increases costs. The deficit is forecast at NZ$9.69 billion in 2012 and will disappear by 2016, claims the Treasury Department.
NZD/USD daily chart with support and resistance lines on it. Click to enlarge:
Let’s start:
- Visitor Arrivals: Monday, 21:45. New Zealand Visitor Arrivals decreased to -2% in Oct from 1%. New Zealand is a popular global tourist destination. Tourism is one of New Zealand’s biggest exports, contributing to roughly 10 percent of its GDP.
- Credit Card Spending: Tuesday, 2:00. The Credit Card Spending in New Zealand grew by 0.4% in October following rise of 0.9% the previous month indicating rising confidence among consumers.
- Current Account: Tuesday, 21:45. New Zealand’s current account deficit widened to reach NZ$0.888 billion during the quarter of April to June, compared with a previous surplus of NZ$0.176 billion, which was revised to NZ$0.159 billion. The current account deficit is expected to widen further during this period due to growing domestic demand for imports from Foreign-owned companies. Deficit is expected to edge up to NZ$2.23 billion this time.
- GDP: Wednesday, 21:45. New Zealand’s Economic continues to expand in the second quarter but in a modest pace, with 0.2% rise in gross domestic product when economists expected growth of 0.8. A moderate rise of 0.1% is predicted.
* All times are GMT.
NZD/USD Technical Analysis
The kiwi made a big drop at the beginning of the week, and found support only at 0.7355 (a line mentioned last week). It then made a recovery attempt but closed at 0.7359.
Immediate and strong resistance is found at 0.74 – which served as a support line for a long time. Above, 0.7523 was a resistance line back in 2009 and is now a minor line.
Above, 0.7644 held the pair in October and also in November, and is now a strong line. Higher, 0.7736 was a support line when the kiwi was trading higher.
Higher, 0.7836, which was a swing high a few weeks ago. The next level is 0.7975, the highest level this year, and just under the round number of 0.80.
Looking down, 0.7355 is the immediate line of support and it proved to be quite strong. It’s followed by 0.73. Lower, 0.7210 was a stepping stone for the kiwi on the way up and now provides support.
Below, 0.7160 was a resistance line in July and also in August, and now works as support. The last line for now is 0.6950, which was the lowest line in 6 months.
I remain bearish on NZD/USD.
After the key line of 0.74 was lost, and retail sales reflected the weak economy, there’s still more room downhill.
Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro/Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Australian dollar (Aussie), check out the AUD to USD forecast.
- For the New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar.
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