The New Zealand Building Consents indicator, released monthly, measures the change in the number of new building approvals issued. It is one of the most important indicators for the construction sector. A reading which is higher than the market prediction is bullish for the New Zealand dollar.
Here are all the details, and 5 possible outcomes for NZD/USD.
Published on Monday at 21:45 GMT.
Indicator Background
An increase in building approvals indicates an expansion of construction activity, which in turn is a critical component of economic growth. Conversely, negative readings indicates a contraction in building activity.
The Building Consents indicator tends to fluctuate sharply, making accurate market forecasts difficult. After an excellent reading in November showed an 11.2% increase, the indicator plummeted last month, recording a contraction of 6.4%. The market forecast for the January reading calls for a sharp increase of 8%, which would be an outstanding reading.
Sentiments and levels
Bernanke’s soft monetary policy has been providing a boost for the kiwi, which is a commodity currency that is less vulnerable to shocks. However, the kiwi has had an impressive rally against the greenback and is now in overbought territory. Any bad news from Europe could bring a correction to NZD/USD. So, the overall sentiment is neutral on NZD/USD towards this release.
Technical levels, from top to bottom: 0.8505, 0.84, 0.8340, 0.8240, 0.8165, 0.8110 and 0.8070.
5 Scenarios
- Within expectations: 6% to 10%: In such a case, NZD/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 10% to 12%: An unexpected higher reading can send NZD/USD well above one resistance line.
- Well above expectations: Above 12%: Such an outcome would prop up the pair, and a second resistance line might be broken as a result.
- Below expectations: 4% to 6%%: A sharper decrease than forecast could push the kiwi below one level of support.
- Well below expectations: Below 4%: A reading much lower than forecast will cause NZD/USD to drop, possibly breaking a second support level.
For more about the New Zealand dollar, see the NZD/USD.