New Zealand Trade Balance, which is released monthly, is an important indicator of the health of the New Zealand economy. A reading which is higher than expected is bullish for the New Zealand dollar.
Here are the details and 5 possible outcomes for NZD/USD.
Published on Thursday at 22:45 GMT.
Indicator Background
Trade Balance is closely linked to currency demand, as foreigners must purchase New Zealand dollars in order to buy New Zealand goods and services.
The indicator has been on a downward trend, and dropped to NZD 534 million dollars last month, well short of the estimate of 636 million dollars. The downturn is expected to continue in the May release, with the estimate standing at just 250 million dollars. Will the indicator beat this gloomy forecast?
Sentiment and Levels
The better than expected GDP and the lack of ability that the RBNZ has in reining the kiwi point to more upside gains after a week of consolidation. The interest rate hike earlier in June has also boosted the kiwi. Thus, the overall sentiment is bullish on NZD/USD towards this release.
Technical levels from top to bottom: 0.9000, 0.8840, 0.8745, 0.87, 0.8640 and 0.86
5 Scenarios
- Within expectations: 210M to 290M In this scenario, NZD/USD could show some slight movement, but it is likely to remain within range, not breaking any levels.
- Above expectations: 291M to 340M: A reading above expectations could send the pair above one resistance level.
- Well above expectations: Above 340M: A sharp rise could push the pair above a second resistance line.
- Below expectations: 180M to 209M: A reading lower than expected could push NZD/USD downward, with one support level at risk.
- Well below expectations: Below 180M: A very poor reading could see the pair break below a second support level.
For more on NZD/USD, see the New Zealand dollar forecast.
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