By TraderVox.com
Tradervox (Dublin) – Commodity sensitive currencies have taken a hit in the recent weeks following the resurgence of debt crisis and political uncertainty in euro area. The New Zealand currency has taken a beating against the US dollar as risk aversion takes center stage in the bourse. The pair is expected to continue on the downward trend during this week as weak financial data is expected from New Zealand this week.
Today, the inflation expectation data will be released. The report is expected to show that the CPI for the first quarter has dropped to 2.5 percent as compared to last year’s first quarter CPI of 2.8 percent. Despite the inflation moderating in March, the advance of the New Zealand dollar is expected to limited due to risk aversion.
Another report that is expected to affect the cross is the trade balance report to be released on Wednesday at 2245hrs GMT. There is expectation that trade balance decline to $134 million in March. This is a continued decline from February when it declined to $220 million. The annual Budget Release on Thursday at 0200hrs GMT is expected to show the tight financial constraints in New Zealand. These reports are deemed as bearing for the NZD/USD cross hence it is expected to continue with a decline setting the kiwi up for another weekly decline.
Some of the technical lines worth watching out for are the 0.7620 which has provided support in May 2012 and its resistance. The 0.7550 has gained a stronger role of separating ranges just like it did in January. On the lower side, the 0.7470 line is a crucial support and it had a similar role at the beginning of 2011. If this line is crossed, then it would open the door for December low support of 0.7370, which is crucial line.
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