NZD/USD Remains Under Pressure Ahead of New Zealand Budget Statement

NEW ZEALAND DOLLAR TALKING POINTS

NZD/USD struggles to reason a belligerent as marketplace participants digest a uninformed developments entrance out of a New Zealand economy, and a sell rate appears to be on lane to exam a November-low (0.6780) as a bearish movement appears to be entertainment pace.With a Reserve Bank of New Zealand (RBNZ) seductiveness rate preference out of a way, courtesy now branch to a annual bill matter as Finance Minister Grant Robertson is scheduled to broach a updates on May 17.

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FINANCE MINISTER GRANT ROBERTSON TO DELIVER ANNUAL BUDGET STATEMENT

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The administration underneath Prime Minister Jacinda Ardern is expected to echo a devise to serve rise a Living Standards Framework (LSF) as officials concentration on a compelling a wellbeing and vital standard for households. The mercantile plan is expected to echo that a mercantile opinion stays ‘supported by domicile income growth, continued race growth, low seductiveness rates and a terms of trade during record levels,’ along with a Budget Responsibility Rules that are to:

  • Deliver a tolerable handling over-abundance opposite an mercantile cycle.
  • Reduce a turn of net core Crown debt to 20 per cent of GDP within 5 years of holding office.
  • Prioritise investments to residence a long-term financial and sustainability hurdles confronting New Zealand.
  • Take a advantageous proceed to safeguard output is phased, tranquil and destined to maximize a benefits. The Government will say a output to within a new chronological operation of spending to GDP ratio.
  • Ensure a on-going taxation complement that is fair, offset and promotes a long-term sustainability and capability of a economy.

With that said, some-more of a same from Mr. Robertson might do small to change a near-term opinion for NZD/USD as a RBNZ stays in no rush to lift a money rate off of a record-low, and new cost movement raises a risk for a serve decrease in a sell rate as bearish movement from progressing this year appears to be reasserting itself.

NZD/USD RISKS FURTHER LOSSES AS RELATIVE STRENGHT INDEX (RSI) DIPS BACK INTO OVERSOLD TERRITORY

The New Zealand dollar might continue to break opposite a U.S. reflection as RBNZ Governor Adrian Orr mostly endorses a wait-and-see proceed for financial policy, and a NZD/USD rate might face uninformed 2018 lows as a Relative Strength Index (RSI) dips behind into oversold territory. The growth suggests a bearish movement is entertainment gait as a oscillator extends a downward trend from progressing this year, with kiwi-dollar during risk of creation a run during a November-low (0.6780) as prolonged as a movement indicator binds next 30.

NZD/USD DAILY CHART

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  • A close next a 0.6950 (61.8% expansion) to 0.6960 (38.2% retracement) segment opens adult a Fibonacci overlie around 0.6820 (23.6% retracement) to 0.6870 (78.6% expansion).
  • Next area of seductiveness comes in around 0.6780 (100% expansion), that lines adult with a November-low, followed by a 0.6710 (61.8% expansion) region.

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— Written by David Song, Currency Analyst

Follow me on Twitter during @DavidJSong.

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