Yesterday, New Zealand dollar has been the strongest currency in the G10 basket mainly benefiting from declining USD 10 year rates. NZD surged before publication of Financial Stability Report that could shed some light on interest rates in the future.

According to the TDS analysts, FSR highlighted reduced risks in the financial system, although global uncertainty remains.

Reserve Bank of New Zealand Governor Graeme Wheeler stated that he is very pleased house price inflation has come off in recent months. RBNZ don’t know if house price inflation will increase again but watching very closely, he added.

“RBNZ is monitoring the significant share of housing loans made to high debt-to-income (DTI) ratios. In general, banks have tightened credit conditions and risks in housing market while seeking to reduce offshore funding reliance. Recovering dairy prices have helped dairy farms to return to profitability but banks still need to be vigilant.  May ANZ business confidence improved to 14.9 (prior 11) while activity steadies around 38 (prior 37). Inflation expectations increased to 2.0% (prior 1.8%).” According to the report.

NZDUSD remains in an uptrend for quite some time now with a little pullbacks. In our view this pair has still some potential to go higher, we would like to remind you our still active trading signal for this pair here.

 NZDUSD has still some room to go higher, our trading signal for this pair remains still active. Source: xStation5