NZD/USD forecast as New Zealand exports and imports surge
- The NZD/USD pair remained in a tight range after strong New Zealand trade data.
- New Zealand exports rose to a record level in the second quarter.
- Imports rose by 24% year-on-year in June this year.
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The NZD/USD pair was little-changed during the Asian session as traders reflected on the latest New Zealand trade numbers. It is trading at 0.6960, which is a few pips below Friday’s high of 0.6990.
New Zealand trade numbers
The New Zealand economy is seeing a strong economic recovery helped by the strong local and international demand as the economy reopens.
A report published by the country’s statistics agency provided more colour about the situation. The country’s exports rose to a new year-to-date high of N$ 6 billion in June. This was a 17% increase from the same period last year. This growth was driven by the rising exports for logs and wood as the housing sector did well in most countries.
Meanwhile, beef exports rose to a new high of N$411 million while milk powder, butter, and cheese rose by 31% to N$384 million. Strong exports are usually a positive sign that an economy is doing well. It is usually a positive sign for the overall economy.
The country’s imports also did well. In total, New Zealand imported goods worth more than N$5.7 billion in June. This was up by about 24% from the same period last year. The growth was mostly attributed to vehicle parts and accessories, which rose to a record N$977 million. Subsequently, the country’s trade surplus narrowed to more than N$261 million.
For the second quarter, New Zealand’s total exports rose to an all-time high of more than N$17.2 billion. Exports rose by 27% to N$16 billion.
The NZD/USD will react to the upcoming Federal Reserve interest rate decision. The bank is expected to leave interest rates unchanged and possibly sound dovish as the number of Covid cases rises. This will signify a divergence from the Reserve Bank of New Zealand that has stopped its asset purchase program.
NZD/USD technical analysis
The 1H chart shows that the NZD/USD pair has been in a tight range in the past few days. The pair is hovering near the lower side of the small channel. It has also crossed below the 25-day and 50-day exponential moving averages (EMA). Further, the Relative Strength Index (RSI) has formed a bearish divergence pattern. Therefore, the pair will likely keep falling as bears target the next key support level at 0.6900, which is about 1% below the current price.