NZD slips on trade data

25 July, 2018

The New Zealand economy looks to be taking a hit, with trade balance data coming in much weaker than expected at -113M (200M exp), showcasing that the NZ economy is still looking sluggish compared to the rest of the world. This was further impacted by export receipts dropping as well to 4.91B (5.06B exp) which will weigh heavily on the Reserve Bank of New Zealand (RBNZ), as it looks to stimulate the economy. Given the recent changes to make sure employment becomes a key focus, it is likely to keep rates flat for some time in order to make sure businesses are able to thrive in the current environment. It will also give the RBNZ a good case to talk down the NZD when compared to the USD as a fall would help boost export receipts and the trade balance data at present.

On the charts it was not a big move, but it was one still the less. With the ever weaker economic data and strong USD it seems likely that the bears will look to maintain control and may look to push things lower, despite the market stagnating for a bit. With that in mind, support levels at 0.6755 and 0.6691 will be the key focus for bearish traders looking to make a push. If we the bulls come back into the market expect a surge to resistance at 0.6819 and 0.6859, but I would be careful about 0.6819 breaking anytime soon as it has seen of a bullish push only last week around this level. The 20 day moving average is also worth taking note as the market is sometimes treating it as a dynamic level when lacking further information.

The other big story today is of course Australian CPI data due out shortly, and the market has expectations that we will indeed see a rise in these figures. Unless we see some major surprises here we probably won't see much in the way of movement. However, with the recent global turmoil's the Australian economy is still looking weaker and the Reserve Bank of Australia would welcome a surprise upturn in inflation. In my experience though they tend not to turn up in sluggish economic periods.

With the AUDUSD likely to be a focus with the CPI data it's certainly worth looking into. Resistance levels can be found at 0.7467 and 0.7557 and I would expect them to be tested if we saw a surprise boost in inflation figures. Also watch the 50 day moving average here as it does act as dynamic levels in some instances. If the bears do take a swipe though then support at 0.7377 and 0.7337 are likely to be prime candidates for targeting.


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