NZD/USD stabilizes around 1-week low ahead of New Zealand trade balance data

• USD strength, dovish RBNZ offered the G-10 loser status to the Kiwi.
• Monthly New Zealand Trade Balance in the spotlight for fresh direction.

Having lagged behind all the G-10 peers, NZD/USD seesaws near 1-week low, close to 0.6703, as markets await monthly New Zealand Trade Balance data at the start of Wednesday’s Asian trading session.

The Kiwi registered heavy losses on Tuesday not only because the US Dollar (USD) rose across the board but also because the Reserve Bank of New Zealand (RBNZ) hinted unconventional monetary policy tools for future use.

The greenback reminded investors of its king-styled performance the previous day as paring back speculations of Fed’s harsh easing joined hands with progress on the US-China trade front and the US lawmakers’ ability to extend debt/spending limit for two years.

In response to an official information request from Bloomberg, the RBNZ mentioned that unconventional policy work is 'at a very early stage' and the central bank is looking at refreshing the strategy concerning it. Traders took it as a sign of upcoming QE from the Asian central bank.

June month Trade Balance data will be in the spotlight of the Kiwi traders for now whereas second-tier statistics from the US could entertain traders then after. The market forecast suggests soft Trade Balance figures of $100 million versus $264 million on a monthly basis confronting the improvement in the YoY figures to $-5.105 billion from $-5.490 billion. Further, exports are likely to weaken from $5.81 billion to $5.29 billion whereas imports might also dip to $5.20 billion against $5.54 billion.

“Exports have historically peaked in May and following last month's record export values, we f/c a 6%/m drop to NZ$5.45b. Imports are forecast to drop only 3% to NZ$5.35bn to leave a NZ$100m trade surplus for June,” says TD Securities.

Technical Analysis

While 21-day exponential moving average (EMA) at 0.6690 acts as immediate support, sellers may seek downside validation from the break of 100-day EMA level of 0.6672. In doing so, July 09 high around 0.6630 will work as the target for fresh shorts. On the contrary, an upside clearance of 0.6716 number comprising 200-day EMA can have 0.6730 and 0.6750 as intermediate halts ahead of visiting July 19 low close to 0.6790.