NZD/USD is losing height following NZ budget announcement

NZD/USD is on the retreat despite upbeat comments on growth and bullish long-term interest forecasts in the NZ budget. 

The New Zealand government expects a bigger surplus of NZD 2.86 billion in 2017-18. The official statement says the real GDP growth is forecast to pick up slightly in 2017, supported by migration inflows, investment and a recovery in exports. Growth is expected to peak at 3.8% in 2019. 

The budget also sees a pick in the underlying inflation pressures as spare capacity is used up, prompting higher interest rates. Long-term interest rates are expected to rise gradually to 4.3% by 2021.

Finance Minister Steve Joyce announced a NZD 11 billion spending on infrastructure over the next four years. Despite this, the NZD/USD is losing height and was last seen trading around 0.7036 levels. 

NZD/USD Technicals

A break above 0.7054 (100-DMA) would open up upside towards 0.7090 (Mar 21 high) and 0.7111 (200-DMA). On the downside, the immediate support is seen at 0.70 (5-dMA) ahead of 0.6966 (50-DMA) and 0.6947 (10-DMA).