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  • The greenback weakness paid off to the Kiwi without much to cheer at home.
  • New Zealand trade balance is in the spotlight with the US-China trade spat being on the radar.

With the US Dollar (USD) weakness helping the Kiwi to register a bounce off-late, the NZD/USD pair trades near 0.6520 at the start of the Asian session on Friday.

The US-China trade tensions grab the spotlight as neither party wants to give up on their demands. Nomura gives 65% probabilities that the US will levy tariffs on all Chinese goods by this year-end.

In addition to the trade war with China, sluggish new home sales and purchasing manager index (PMI) data also weighed on the US Dollar (USD) on Thursday. New home sales fell 6.9% while manufacturing PMI revisited September 2009 levels.

There were fewer positives from the domestic end of New Zealand.

Recent comments from the US President Donald Trump show his positive outlook towards meeting the Chinese leader Xi Jinping on the sidelines G20. Though, Mr. Trump doesn’t want to give up on his MAGA (make America great again) dream and is firm to keep Huawei on the check.

Immediate attention of the Kiwi traders will be on April month trade balance data, to be out at 22:45 GMT. Forecasts suggest $-5.465 billion trade balance (YoY) versus $-5.620 billion prior. Further, exports may flash $5.35 billion against $5.70 billion earlier whereas imports can rise to $4.90 billion compared to $4.77 billion earlier.

Ahead of the release, TD Securities said, “Apr trade balance is seasonally a surplus month, but follows a blockbuster +$NZ922m for March, led by record exports. We pencil in a surplus of +$NZ700m (mkt $NZ450m) as exports remain elevated ($NZ5.5b) but fuel imports ($NZ4.8b) eat into the surplus somewhat.”

Technical Analysis

A downward sloping trend-line since March 26 at 0.6530 gains immediate attention as a break of which could open the door for the quote’s extended recovery to 0.6580 and then to 0.6600 round-figure.

In a case of further weakness beneath 0.6480 support, October 2018 low near 0.6425 should gain bears’ attention.