Search ForexCrunch

The  NBNZ Business Confidence  Index measure the levels of business confidence in the New Zealand economy. The index is based on a survey of a wide range of businesses, including manufacturers, retailers and service providers.    A reading  which  is better than the market  forecast is bullish for the New Zealand dollar.

Here are the details and 5 possible outcomes for NZD/USD.

Published on Thursday at  1:00 GMT.

Indicator Background

Business Confidence is a critical component for economic growth. An increase in confidence indicates that consumers are purchasing the goods or services that businesses have to offer, which in turn is a sign of increased economic activity.

The index was down sharply in May, posting a reading of 27.1 points. This was the lowest figure since last December. Another  poor reading in June would be a sign of weak confidence in the economy by the business sector.

Sentiment and Levels

The New  Zealand economy has showed some signs of strength, such as a stellar GDP earlier in June. However,    the  worsening fiscal crisis in  the Euro-zone  and the absence of QE3 in the US  will continue  to weigh on the kiwi, as investors looking for safety  flock to currencies like the US dollar and  Japanese yen.    So, the overall sentiment is  bearish on NZD/USD towards this release.

Technical levels from top to bottom: 0.8185, 0.8060, 0.80, 0.79, 0.7810  and 0.7723.

 

5 Scenarios

  1. Within expectations:  27.0 to 33.0  : In this scenario, NZD/USD could show some slight fluctuation, but it is likely to remain within range,  without breaking any levels.
  2. Above expectations:  33.1 to 36.0: A strong reading   could  push the pair  above one  resistance line.
  3. Well above expectations: Above 36.1: A sharp rise in business confidence  could propel  NZD/USD upwards, and two or more resistance  lines could fall.
  4. Below expectations:  24.0 to 26.9: A lower than expected reading could pull the pair downwards, with one support level at risk.
  5. Well below expectations: Below 23.9: A very  poor reading will hurt confidence in the kiwi, and NZD/USD could  drop below  two  or more support levels.

For more on the kiwi, see the  NZD/USD forecast.