Forex Investment and Currency Trading

The NZD is a notable under performer overnight with weak business confidence data and S&P putting the country’s credit rating on negative watch; sovereign risk is gaining a little more attention this week, following S&P’s moves to finger weaknesses in the Irish, Greek and Spanish fiscal positions
over the past few days. Despite the rating agencies apparent confidence in the US’ fiscal position, some of the issues raised by S&P with regard to the NZ and the peripheral euro zone economies may count for some other major economies as well; other ratings downgrades could follow and it remains to be seen [...]

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NZD (and to a lesser degree the AUD) has had a tendency to lead moves in Majors (no, not the JPY) vs. USD lately and so NZDUSD bounce off 0.5793 low worth taking note of.
Granted, RSI’s are not as oversold as they were in previous mini-rallies (Oct, Sep, Aug ’08) but daily readings are slipping
Ability to hold 0.5800 next couple days could pave the way for another mini rally higher though likely limited to 0.6200-6260 highs
Remain USD bulls but see this as potential chance to sell into a corrective rally
NZD pullback of this nature also likely to coincide with some [...]

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A number of short term drivers that have increased the NZD bearishness. Last week’s GDP data confirmed that the economy shrank in Q1. And this was not a one off. There was widespread weakness across the primary and manufacturing sectors and parts of the services sector, as the initial effects of the drought, the housing market correction, and a major squeeze on household budgets start showing up in the national accounts data. The already high chance of economic recession just took a step higher. Indicators suggest that Q2 will be worse than Q1. That should be good enough reason for [...]

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The NZ economy grew by an estimated 3% in the fiscal year ended March quarter 2008 (actual data reported June 27) but finished the fiscal year with a limp.
While the RBNZ left its key OCR at 8.25% in June, the accompanying decision and monetary policy statement (MPS) was much more dovish. As in the recent Financial Stability Report the central bank is worried about the future impact of the falling housing market on spending. It assumes a multi year 22% real depreciation of house prices (about half the real fall post the 1970s oil shock) and on that basis the [...]

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