The rates continue within a weak downtrend, which started five months ago. It cannot be said that the New Zealand dollar was very weak, but investors preferred to invest in the USD amid the US economic recovery and perspectives for a change in the Fed's monetary policy.
This month, the risk of the spread of the Delta strain and a new wave in the coronavirus pandemic put pressure on risky assets, with the NZD being one of the most popular such currencies, which is always one of the first to be influenced by negative factors that threaten the growth of the global economy. In the absence of important macroeconomic data, these factors have become key in assessing the value of the NZD.
This week, the New Zealand dollar managed to strengthen against the USD because employment reports in the US were disappointing: the number of applications for unemployment benefits increased to 419,000, and the total number of people receiving benefits also increased above the forecasts. The number of construction permits issued in June also does not correspond to the forecasts. But will this be enough for further growth in favor of the NZD? New incentives will be needed, such as an improvement in the epidemiological situation or improved economic indicators in New Zealand.
Next week will be a key one for this currency pair. The week will begin with the publication of the trade balance in New Zealand for June, and there is reason to expect a reduction in the deficit. Next, we are waiting for the US consumer confidence index and the FOMC meeting with a decision on the interest rate. No one expects changes in the rate next week, but investors will be interested in the regulator's plans for 2022 and 2023. Technical analysis tools in general are committed to the deals to BUY. However, we consider the upward movement recorded this week only as another price correction and expect the continuation of the downward trend by the beginning of August. Therefore, our choice for today are the deals to SELL.
