Search ForexCrunch

The kiwi continues to strengthen raising concerns among government officials. Retail sales is the major event this week. Here’s an  outlook  for the events in New  Zealand, and an updated technical analysis for MZD/USD

The central bank of New Zealand maintained its benchmark interest rate at 2.50% despite signs of inflationary pressures from an expected GDP expansion, making rate hikes inevitable in the next two years. Will the central bank increase rates next time? Let’s Start:

NZD/USD  daily chart with support and resistance lines on it. Click to enlarge:NZD USD Chart June 13 17

  1. REINZ HPI: Sunday, 23:00. New Zealand house price index increased in April by 1.1% indicating improvement after the devastating Christchurch earthquake in February. The housing sector suffered weak demand since 2011and received another blow after the earthquake. A similar rise is expected.
  2. FPI: Monday, 23:45. Food price Index increased by a mere 0.1% in April from a 0.3% gain in the previous month due to a drop in fruits and vegetable prices. However there is a general trend of rising prices which is expected to create inflationary pressures this year. A further rise is predicted.
  3. Retail Sales: Tuesday, 23:45. New Zealand retail sales shrank further in the last quarter of 2010 amid uncertainty in the market lead by the flimsy recovery and high unemployment rate. Retail sales remained flat while Core retail sales decreased 0.4%. Retail sales is expected to gain 1.0% while Core retail sales is predicted to increase by 0.7%.
  4. Westpac Consumer Sentiment: Wednesday, 23:00 New Zealand consumer confidence plunged in the first quarter to 97.9 from 108.3 following the devastating earthquake in Christchurch indicating pessimism among consumers regarding the outlook of NZ ‘s economy. The lowest reading in two years id expected to rise this time.
  5. Business NZ Manufacturing Index: Wednesday, 23:30. New Zealand manufacturing sector expanded in April by 1.3 pt reaching 51.5. This figure indicates acceleration I production and a recovery trend.
  6. Manufacturing Sales: Wednesday, 23:45. New Zealand Manufacturing Activity for the last quarter of 2010 increased by 3.1% after 1.3% rise in the previous quarter.   However the first quarter reading is expected to decline following the earthquake in February. A drop is expected now.

* All times are GMT.

NZD/USD  Technical  Analysis

The kiwi traded under the previous all time peak of 0.8214 (discussed last week). After a struggle, the pair peaked at 0.83, which is a new line now. It didn’t hold so high, and eventually closed just under 0.8214.

Technical levels from top to bottom:

The newall 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. The pair is around this area now, and it will be pivotal at the beginning of the week.

The 81 line, which was also a line of resistance in the past, proved to be a good point of support just a few weeks ago.  The previous post crisis high of 0.7975 remains an important line, remaining very distinctive, separating ranges. The importance of this line was seen just now.

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 neutral on NZD/USD.

While the economy has stabilized in New Zealand, there is still high uncertainty coming from the Australian, Chinese and US slowdowns. The current exchange rate is hurting exports.

Further reading: