NZD/USD recovery accelerates after strong New Zealand exports data

The NZD/USD recovery accelerated on Friday after the relatively impressive New Zealand trade numbers. The pair rose to 0.7015, which was about 2.15% above the lowest level on Friday last week.

New Zealand trade numbers

The New Zealand economy has staged a strong recovery helped by local and external demand. According to Statistics New Zealand, the country’s imports increased by 31% to N$5.4 billion. This trend happened as New Zealand’s car imports surged to a record high. 

The same trend happened in exports. The country sold goods worth more than N$5.9 billion in May. This increase was because of strong dairy sales, which rose by 12% to $1.5 billion. Milk powder sales rose by 18% while fresh milk soared by 42%. 

As a result, New Zealand’s total trade surplus rose to more than N$469 million. This was substantially higher than the five-month average of N$415 million. These numbers came after the relatively strong New Zealand GDP data that were released last week. The figures revealed that the economy increased by 1.6% in the first quarter after falling by 1.0% in Q4. 

Therefore, the new trade numbers will likely reinforce the recent hawkish RBNZ stand. In its recent interest rate decision, the bank left rates intact and signalled that the next move will be to taper asset purchases.

Later on Friday, the NZD/USD will react to the latest US personal consumer expenditure (PCE) data, which is the Fed’s favourite inflation data. Economists expect the data to show that core PCE increased from 3.1% in April to 3.4% in May. They also expect personal income to decline by 2.5% while spending to increase by 0.4%.

NZD/USD forecast

The four-hour chart shows that the NZD/USD price broke out lower last weeek after the hawkish Fed interest rate decision. This saw the pair fall to a multi-month low of 0.6620. It also managed to break out below the important support at 0.7132. 

The pair recovered some of last week’s losses this week and has managed to move above the 25-day and 50-day moving averages while the Relative Strength Index has jumped to 62. Therefore, the pair has more upward room to run in the near term. Still, after last week’s bearish breakout, there is a possibility that it will resume the downward trend.