NZD/USD: No response to New Zealand’s downward revision of budget surplus forecast

• NZD/USD turns a blind eye to New Zealand’s decision to cut budget surplus forecast.
• New Zealand’s Finance Minister says increased spending to support the economy. 

The New Zealand government announced a downward revision of budget surplus forecast for 20019/20 a few minutes before press time. 

The news, however, has failed to move the needle on NZD/USD, leaving the pair mildly bid around 0.6515. 

The government cut the budget surplus forecast for 2019/20 to NZD 1.3 billion and also revised lower the GDP forecast for 2018/19 to 2.1% from 2.9%. 

New Zealand’s Finance Minister Grant Robertson said that the government is planning to move to 15-25% debt range from 2022 from the current 20% and added that increased domestic spending will help the economy absorb external shocks. 

The lackluster reaction by NZD/USD indicates the downward revision of budget surplus was expected. After all, the government has little room for fiscal consolidation, courtesy of economic slowdown. 

Looking forward, the currency pair will likely challenge the previous day’s high of 0.6552 if the risk sentiment approves. So far, however, the futures on the S&P 500 – a benchmark for global equities – are showing little signs of risk reset. 

Pivot levels