NZD/USD holds the strength despite higher than forecast New Zealand trade deficit

Despite witnessing higher than forecast trade deficit, the NZD/USD pair remains on its northwards trajectory as it quotes 0.6623 during the early Asian session on Tuesday.

The May month trade numbers from New Zealand aren’t quite welcome to the Kiwi pair’s latest upswing. The headline Trade Balance (YoY) shrank more than $-5.325 billion forecast to $-5.49 billion whereas imports rose to $5.54 billion from $5.12 billion (revised). Further, exports also increased to $5.81 billion against $5.5 billion revised. Additionally, Trade Balance on a monthly basis grew below $971 million forecast to $264 million.

It should also be noted that Trade Balance priors were revised down from $-5.480 billion and $433 million to $-5.56 billion and $383 million on yearly and monthly basis respectively.

The latest survey from the Organization for Economic Co-operation and Development (OECD) notes correction in the housing market risk to be the main challenge for the New Zealand economy while the integration of migrants into the labor market and the need to boost productivity growth were cited as additional concerns that need attention.

While Credit Card Spending and Trade Balance are already out and loud, the Reserve Bank of New Zealand’s (RBNZ) monetary policy meeting, up for tomorrow, becomes the key concern for the Kiwi traders.

Even if the central bank isn’t expected to alter its present monetary policy after recently announcing a rate cut, a lot has been changed at the economic front since then. Not only mixed data points at home but trade developments and the US Federal Reserve’s dovish stunt will also have its impact on tomorrow’s RBNZ announcement.

Technical Analysis

Downtick below 50-day simple moving average (SMA) level of 0.6589 becomes necessary for sellers to aim for 0.6560 and 0.6515 whereas current month high surrounding .6682 and 100-day SMA level of 0.6700 could become buyer’s favorite during further advances.