FXStreet (Guatemala) – NZD/USD is currently looking to end 2015 in the US 10 cents lower than where it started.

We have seen continued easing from the RBNZ throughout the year, the last of which came this month when the Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 2.5 percent. The key points in respect of 2016’s outlook for the economy, taken from the RBNZ’s recent statement, are as follows:

RBNZ’s outlook

“Globally, economic growth is below average and inflation is low.

Financial markets remain concerned about weaker growth in emerging economies, particularly in China.

Markets are also focused on the expected tightening of policy in the United States and the prospect of an increasing divergence between monetary policies in the major economies.

Growth in the New Zealand economy has softened over 2015, due mainly to lower terms of trade.

Slowdown has seen an increase in spare capacity and unemployment.

A recovery in export prices, the recent lift in confidence, and increasing domestic demand from the rising population are expected to see growth strengthen over the coming year.

The New Zealand dollar has risen since August, partly reversing the depreciation that occurred from April. The rise in the exchange rate is unhelpful and further depreciation would be appropriate in order to support sustainable growth.

House price inflation in Auckland remains high, posing a financial stability risk. There are some early signs that Auckland house price inflation may be moderating.

CPI inflation is below the 1 to 3 percent target range, mainly due to the earlier strength in the New Zealand dollar and the 65 percent fall in world oil prices since mid-2014. The inflation rate is expected to move inside the target range from early 2016, as earlier petrol price declines will drop out of the annual calculation, and the lower New Zealand dollar will be reflected in higher tradables prices.

There are a number of uncertainties and risks to this outlook. In the primary sector, there are risks that dairy prices remain weak for longer, and the current El Niño results in drought conditions and weaker output. Risks to the domestic outlook include the prospect of net immigration staying high for longer and of household expenditure picking up on the back of strong house prices.

Monetary policy needs to be accommodative to help ensure that future average inflation settles near the middle of the target range.

The Bank will reduce rates if circumstances warrant.”

NZD/USD levels

Technically, the price has risen to challenge the 200 DMA at 0.6842 vs the downtrend of 0.76. A break of the psychological 0.70 handle remains a key objective to close the gap at 0.7107. A reversal looks in at the 20 DMA at 0.6760 below S3 at 0.6779.

NZD/USD is currently looking to end 2015 in the US 10 cents lower than where it started.

(Market News Provided by FXstreet)

By FXOpen