Forex news. Earthquake in Canterbury will cost the USA $18 bln., which evidently exceeds the preliminary assessment of the damage that amounted to $4 bln. The number of houses that need repair to the sum of more than $100,000 exceeds the preliminary data twice and amounts to 30,000 houses.
This is a frightening large number, as expressed by the Minister of Finance Bill English. However, against all odds, this piece of news was displayed under “no panic” label: in their joint statement Bill English, the head of Earthquake Recovery Authority Jerry Brown, and the executive director of EQC comforted the audience that all claims on compensation of damage will be satisfied and recovery will continue.
High priority measures have already been taken: Jerry Brown has left for Monte Carlo and London in order to ease insurers, although a considerable rise of expenditures connected with reinsuring is expected.
The main problem of the recovery is that much more money is needed than it is now commanded by EQC and the Natural Disaster Fund. Further disasters will definitely rest upon the Government’s shoulders. The outcome from this situation is evident: the government will be obliged to cover the deficit, which is caused by the lack of available funds.
Bill English still rejects the opportunity of introducing a tax on earthquake, which is being actively suggested by the Green Party. However, one shall keep in mind November elections…
Time will show what will happen after November 26, but today EQC is already actively dealing with reconsideration of available sources of income and with finding the new ones.
It is obvious that the government will have to borrow more or spend less, or even to combine both. Whereas from the point of view of international rating agencies, which are keeping an eye on how the situation develops, there arises a very reasonable question: is it the right time for the government to start the “tax earthquake”?
Meanwhile, NZDUSD currency pair has moved into a mid-term bullish trend, the support of which is provided by MF sloping channel and MF pivot of 0.8262. As the experts of Masterforex-V Department of In-Depth Trade System Study admit, the price has broken MF bear pivot of 0.8465 and is aiming to hit MF pivot of 0.8677; breaking the latter will be the evidence of serious bullish intensions.
We are currently observing “the moment of truth” of the long-term trend: breaking the maximum of 0.88418 will give a hint on continuing the long-term bullish trend, whereas breaking the minimum of 0.7964 will show the beginning of possible long-term bear trend.
