Improved trade balance, updated OCR Westpac to increase NZD?

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New Zealand Dollar, NZD / USD, Trade Data, Economic Data – Talking Points

  • New Zealand trade data shows positive economic dynamics
  • Westpac advances schedule for OCR hike to August 2022
  • NZD / USD Clears 200 Day SMA, Attention Shifts to Trendline

Friday’s Asia-Pacific Outlook

New Zealand on Friday morning released trade data for May, with exports and imports at N $ 5.87 billion and N $ 5.40 billion, respectively. The overall balance stood at N $ 469 million, according to the DailyFX economic calendar. The Kiwi dollar is set to post a fourth daily gain against the greenback after the FOMC-induced sell-off last week.

The island nation’s economic situation continues to improve, as Westpac noted in postponing its forecast of an overnight rate hike (OCR). Michael Gordon, Westpac’s acting chief economist for New Zealand, said OCR is expected to reach 2% by the end of 2024 and the economy’s recovery is doing well. The updated forecast may help increase the underlying strength of NZD.

Elsewhere, South Korea’s business confidence index rose to 98 for June, from 96. Later today, Japan will see the Consumer Price Index (CPI) figures for Tokyo cross. cables, analysts expecting the June figure to climb to -0.1% from -0.2% year-on-year. The Asia-Pacific session will end with foreign exchange reserves for the week ending June 18 outside India.

Stock markets could move higher to close the week after Wall Street’s bullish session on Thursday when the benchmark S&P 500 closed at a record high. Market sentiment strengthened after Federal Reserve announcement positive results for annual financial stress test. Additionally, President Biden announced that an infrastructure deal between a bipartisan group of senators was struck.

Traders will look to US inflation numbers to close the trading week as US personal consumption spending is set to cross the cables during Friday’s New York session. The Fed’s preferred measure, core PCE – which excludes food and energy prices – is expected to fall to 3.4% year-on-year, from 3.1% the previous month. A better-than-expected inflation figure could lead traders to consider a more hawkish Fed.

NZD / USD technical outlook:

The New Zealand dollar broke its 200-day simple moving average (SMA) overnight, with the NZD / USD posting a fourth consecutive daily gain. The currency pair is approaching a descending trendline formed from the May swing high, which may constitute resistance. The MACD line is aiming higher, potentially approaching a cross above its signal line, a bullish signal. Alternatively, a lower drop may see the 200 Day SMA providing support.

NZD / USD Daily Chart

Graphic created with TradingView

NEGOTIATION RESOURCES in New Zealand dollars

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwateron Twitter

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