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NZD/USD Higher On Trade Surplus Ahead of RBNZ Rate Decision

NZD/USD Higher On Trade Surplus Ahead of RBNZ Rate Decision

Jimmy Yang,

THE TAKEAWAY:New Zealand posts better-than-expected June trade surplus > Declined imports outweigh declined exports > NZD/USD Edged Higher

The Kiwi edged higher against the US Dollar as New Zealand reported a better-than-expected June trade surplus. However, a decline in imports to 3.60 billion from 4.01 led the improvement while exports declined slightly to 4.02 billion.

Traders are likely looking toward the Reserve Bank of New Zealand’s interest rate decision due tomorrow at 21:00 GMT. Economists surveyed by Bloomberg expect the central bank to maintain the rate at the current 2.50%. However, rhetoric from the decision will likely influence investor expectations for future economic policy. A rate cut in the future to encourage economic growth could make the currency less attractive toward yield-seeking investors and send the pair lower. Alternatively, Credit Suisse’s overnight index swaps indicate market expectations for a 40% chance of a rate increase in the next 12 months which could move NZD/USD higher.

NZD/USD (5-Minute Chart)

NZDUSD_Higher_On_Trade_Surplus_Ahead_of_RBNZ_Rate_Decision___body_Picture_1.png, NZD/USD Higher On Trade Surplus Ahead of RBNZ Rate Decision

Source: FXCM Marketscope

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Jimmy Yang, DailyFX Research Team

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.