Currently NZD well within my technical considerations from last week. In the short term (the start of this week) at least, the NZD is benefiting from exports (narrowing deficit). So far the fundamental view of regional growth may out weigh the short term effects from the earthquake.
The total tab from earthquake damages are estimated to be about 15 to 20 billion NZD about 3 times the initial estimate of 5 billion NZD. The government is expected to pay for 5 billion dollars of damage. The demand factors on the NZD will continue to outweigh expectations of a interest rate cut as long as exports can continue to maintain or increase (which of course is dependent on regional demand/growth). However, this view may be more relevant to the longer term as analyst expect interest rates to be cut on March 10.
"RBNZ Governor Alan Bollard said the central bank is “ready and able to supply any cash required by banks.”
Any big short term dips to significant support levels should be seen as longer term buying opportunities as longer term demand on NZD will be accompanied with recovery growth.
I will reiterate important support levels to:
- 0.729
- 0.685
Conclusion:
High short term risk remains, however I maintain longer term bullish view.
Alexander Lê
Managing Partner
Analyze Capital LLC
analyzecapital@gmail.com
sources:
http://www.bloomberg.com/news/2011-02-28/new-zealand-quake-damages-may-cost-as-much-as-15-1-billion.html
http://www.businessweek.com/news/2011-02-27/new-zealand-trade-deficit-narrows-on-exports-imports-fall.html
Alexander Lê
Managing Partner
Analyze Capital LLC
analyzecapital@gmail.com
sources:
http://www.bloomberg.com/news/2011-02-28/new-zealand-quake-damages-may-cost-as-much-as-15-1-billion.html
http://www.businessweek.com/news/2011-02-27/new-zealand-trade-deficit-narrows-on-exports-imports-fall.html
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