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Forex: NZD/USD edges higher in early Asia trade

FXstreet.com (Barcelona) - The NZD/USD finished the week up 48 pips at 0.8532. It could be a busy week for the pair with a number of important economic releases due out which include the RBNZ Financial Stability Report and NZD Employment Data. In the near term, it will be worth keeping an eye on Aussie Retail Sales (1:30 GMT) and HSBC China PMI (1:45GMT) both due out a bit later in the session. The pair is currently up 20 pips at 0.8552 during the Asia session.

According to analysts at BNZ group, “It’s a while before we get the Reserve Bank’s next Monetary Policy Statement but we do get its Financial Stability Report on Wednesday. These reports have taken on much greater market significance now that the RBNZ has intimated that it believes house prices are overvalued and might threaten the stability of the banking sector if they continue to rise at the recent pace.”

They went on to add, “We believe the Reserve Bank is keen to implement some form of prudential policy measure to rein in the housing market so we will be looking closely for hints as to how close the bank is to pulling the trigger and what the catalyst for such might be. We think the most likely initial action will be for the central bank to raise the risk weight on high loan to value ratio (LVR) loans. It is notable that the retail banks are already positioning themselves for this by increasingly differentiating the loan rate based on how high the LVR is”

From a technical perspective, the pair has been holding up relatively well in recent weeks and could be in for another leg higher after the recent close above 0.8500.

Nicole Elliot, CFTe, of Forex Trading TV commented, “It’s important the Kiwi continues to maintain above 0.8460 which was previous resistance and now support on the longer term time frames. The Kiwi is now trading above the mean of the Bollinger (0.8500), which would suggest a test of the .08580 (upper Bollinger level) at some point in coming days.”

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