New Zeland Current Account Balance Prints Net Capital Outflow for First Quarter, NZD/USD Declines on the News
THE TAKEAWAY:[New Zealand ran a Current Account deficit for the first quarter] > [ Signals net capital outflow] > [NZDUSD decline on the news]
New Zealand Current accounts posted a deficit of $NZ -1.31Bfor the first quarter, The NZDUSD declined 31 pips after the release of the negative economic data. Additionally the 2011’s fourth quarter deficit was revised higher to $NZ -2.833B. The deficit signals a net capital outflow for the New Zealand economy, which is fundamentally poor for the value of the currency.
Chart created using Strategy Trader- Prepared by Adrian Robles
The NZDUSD declined 31 pips fallowing today’s release of the New Zealand Current Account Balance. The Pair is currently hitting resistant’s against its 10 period Exponential Moving Average.
New Zealand has been experiencing consistent net cash out flows since 1973. Although the Reserve Bank of New Zealand has new fears that exports could decline, widening the deficit, due to weak economic outlook among its trading partner. In addition the Reserve Bank of New Zealand’s governor Allan Bollard stated in his March press releases that, “the high value of the New Zealand dollar is detrimental to the tradable sector”.
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