It was a dismal night for the kiwi, with NZDUSD smashing through a support zone around 0.81000 on the back of USD strength, fears about China’s economy and Fonterra’s decision to cut its forecast milk payout to NZ farmers. This weight on the kiwi is beginning measured against better than expected trade data and the National Party’s big win at the weekend’s elections, but this isn’t enough to save the commodity currency.
Earlier today NZ August trade figures came in better than the market was expecting. NZ’s trade deficit narrowed to 472m from a revised 724m, beating an expected increase to 1,125m. Exports fell to 3.52bn from a revised 3.69bn in July, but it was better than an expected fall to 3.2bn. Imports were less than expected at 4.0bn.
The stronger than expected performance by exporters during August provided the kiwi with a brief ray of sunlight in its otherwise gloomy outlook. Yet, NZDUSD has since lost all of these gains to some USD strength, which is not surprising given that today’s figures don’t materially change the outlook for the commodity currency.
AUDNZD
Overall, we are maintaining a slight bearish bias on the NZD, but expect it may stay around current levels against the USD dollar. Nonetheless, if the Australian dollar continues to fall, AUDNZD may present an interesting trading opportunity.
From a technical perspective, the pair may be heading for another sell-off. The pair is testing a critical long-term support zone just above 1.0900 (see chart). RSI is also testing a support zone. A break would be bearish in our opinion, and may see AUDNZD make a run for another long-term support zone around 1.0750.
Source: FOREX.com
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