New Zealand pauses at 70

The New Zealand dollar has started off the new trading week with slight gains. Currently, NZD/USD is trading at 0.7010, up 0.16% on the day.

NZ dollar claws back to 70 level 

The New Zealand dollar went on a plunge last week, falling 2.32%. It was the currency’s worst weekly performance since September 2020. The reason for the sharp massive downward move was an announcement by the New Zealand government aimed at discouraging speculators from purchasing houses, which has led to a sharp rise in the prices of houses and raised fears of a housing bubble. The kiwi reversed directions on Friday and has managed to claw its way back to the 70 level in the Monday session.

New Zealand’s economy has recovered well from the Covid pandemic, but an unwanted result has been a property boom, with investors taking advantage of cheap mortgages. The government has introduced various measures to chill speculation on the red-hot housing market, including instructing the central bank to take the housing market into account when making monetary policy. However, there are concerns that these latest moves could have a profound negative effect on the economy in general in addition to cooling the red-hot housing market. Investors were quick to react to the housing reforms, with the New Zealand dollar falling over two per cent after the announcement.

On the fundamental front, we’ll get a look at New Zealand Building Consents (21:45 GMT), which continues to point to growth in the construction sector. Investors will be keeping a keen eye on Final ANZ Business Confidence (Wednesday, 00:00 GMT). After a streak of 35 straight declines, Business Confidence has recorded two gains, which indicates optimism.

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NZD/USD Technical

• There is a critical support line at 0.6985. If NZD/USD closes below this line, the pair would then target the 0.68 line
• There is resistance at 0.7140, followed by resistance at 0.7282

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