NZD / USD remains headed towards 0.6700 despite firming New Zealand trade balance

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  • NZD / USD remains depressed near intraday low after November New Zealand trade data.
  • New Zealand’s trade balance, exports are improving, imports are also increasing.
  • Fed Waller reiterated his concerns about the rate hike, New Zealand experts warning of an increase in virus cases.
  • Light calendar, holiday mood can restrict movement, but you have to keep the reins.

The NZD / USD ignored bullish New Zealand trade figures early Monday morning in Asia, refreshing the intraday low to 0.6737 after the data was released.

Following a central bank-led drama over the past week, fears of the South Africa-linked variant of the coronavirus are joining new discussions surrounding the U.S. Federal Reserve rate hike (Fed ) in early 2022 seem to be weighing on the Kiwi pair lately.

New Zealand’s (NZ) trade balance matched the forecast of -6.047 billion dollars with figures of -6.040 billion dollars, while exports and imports both increased to 5.86 billion dollars and 6.73 billion against 5.36 billion dollars and 6.66 billion dollars revised in that order. Earlier today, a private New Zealand consumer confidence gauge showed the pessimists had the upper hand over Q4 data. “The Westpac-McDermott Miller Consumer Confidence Index fell to 99.1 from 102.7 in the previous quarter. A reading above 100 indicates more optimists than pessimists, ”Reuters said.

Comments from Fed Board member Christopher Waller on Friday boosted the US dollar by saying, according to Reuters, “The ‘goal’ of the Fed’s decision to step up the pace of its QE was to “Live” the March Fed meeting for a blue chip hike.

The gossip about a surge in covid cases like Australia’s New South Wales (NSW) is also weighing on NZD / USD prices. NZ Herald said, “Covid-19 modeling experts warn that the highly transmissible variant of Omicron poses a serious risk for a largely unlimited summer. Thirteen cases of the variant have now been detected in isolation and managed quarantine. “

On another page, escalating tensions between China and the United States are also questioning Kiwi prices due to Beijing’s trade links with Auckland.

Amid those games, 10-year US Treasury yields fell 1.5 basis points (bps) to 1.41% as Wall Street benchmarks closed in the red on Friday.

That said, NZD / USD traders are expected to see a further decline amid the market’s rush for safety and the absence of new catalysts on the schedule. It should be noted that the People’s Bank of China (PBOC) is set to report its monetary policy results at 1.30am GMT with discussions surrounding further rate cuts, which in turn could favor sellers of kiwi pairs.

Technical analysis

NZD / USD recedes and bounces off a descending support line from March, suggesting further weakness towards a new test of trendline support reported near 0.6700. However, oversold conditions in the RSI point to a rebound from the indicated support line, a break of which will open the doors to a downtrend towards the late 2020 bottom near 0.6590.

On the contrary, a clear bullish breakout of the 21-DMA level near 0.6800 will need to be validated from the September low near 0.6860 before recalling the NZD / USD bulls.


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