Global macro overview for 31/05/2017:
The Reserve Bank of New Zealand published its Financial Stability Report (FSR) overnight. The Financial Stability Report is published every six months and it assesses efficiency of the New Zealand financial system. In the latest issue, the main topic was the overheated housing market which is the key challenge to the New Zealand financial system. The Reserve Bank of New Zealand siad: " The outlook for the housing market remains uncertain", but the government is still trying to tighten loan-to-value ratio (LVR) on investment properties. Nevertheless, the real estate values rose 13% last year, which is far more than in the other countries (except Australia). The fasted advance was among homes with price over one million dollars. On the other hand, the RBNZ mentioned other problems. One of them is the bank sector and the other one is the diary sector of the economy, which is a major driver of the country's export sector.
The bank's next FSR report will be released on November 29. If the RBNZ does not cut the interest rates, the outlook for the New Zealand Dollar will remain positive. The more so if the Fed will keep rising interest rates on a more or less regular basis. The biggest threat for NZD is the overheated property market and a possible housing bubble.
Let's now take a look at the NZD/USD technical picture on the daily timeframe. The market is trading above all of the moving averages, but still below the important technical resistance at the level of 0.7129. The market conditions are starting to look overbought and the next technical support is seen at 0.7089 and 0.7036.
