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At the Forex currency market the New Zealand Dollar rate continues to grow, reaching again local highs of 0.8199 at the Asian session today.

Forex forecast: MACD indicator is in the positive area for the pair NZD/USD, and started to go up, giving a pair buy signal. Stochastic Oscillator has reached oversold zone, maintaining a similar signal.

Forex recommendations: in case of breakdown at the level of 0.8190, the pair will go to 0.8200 and   0.8220. 

Growth of the New Zealand Dollar has slowed down when it became known that rating agency Moody's downgraded ratings of the largest banks of New Zealand to the level of AA3 from the previous AA2, while the rating of the subordinated debt was downgraded by two positions, to the level of A2.

Agency Fitch stated that New Zealand economy has demonstrated stabilization of the budget however it is not sufficient yet to revise the rating outlook of the country from the current “negative”. Moody’s noted that authorities of New Zealand are doing a good job, and they take every step to revert the economy to its normal state.

Note: that budget deficit in New Zealand amounted to NZ$10.17 billion within 9 months, as of 31 March, which had been 15% higher than expected by economists. This fact provoked sales of the NZD previously.

It became known this week that two-year inflationary expectation in New Zealand increased by 0.3% in QII against the rise of 2.6% on quarterly basis earlier.

It is also worth noting that producer price at entrance into QI rose by 2.2% q/q, while the forecast of growth had been 0.6% q/q, producer prices at exit increased by 1.7% q/q with the forecast of 0.5% q/q. 

Country’s unemployment rate fell to 6.6% in QI against the level of 6.8% in QIV, 2010. The forecast had been 6.7%. In addition the proportion of labor force increased to 68.7% against the previous level of 67.9%. Although indicators are favourable, ASB still believes that report is ambiguous: it is possible that the earthquake of February will have more serious impact on the economy than expected and it will have additional pressure on the labor market of New Zealand and will have an adverse affect on the prospects for the sector as a whole.

The data released earlier was mixed: house prices fell by 1.9% m/m in April against the decline by 2.0% in March and credit cards expenses rose by 1.7% ?/? in April against the increase by 0.5% in March and credit cards costs rose by 1.7% m/m in April against the growth by 0.5% in March. Therefore, real estate sector of New Zealand started to recover and it is a strong supportive factor for the economy. According to REINZ estimates house prices index in New Zealand increased by 1.1% m/m in April against the forecast of growth by 0.5% m/m. In addition, the agency reported that the level of house sales last month was -4.2% y/y against the level of -5.1% y/y in March. 

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