NZD/USD forecast as New Zealand exports, imports rises
- New Zealand’s exports and imports rebounded in May.
- The country’s trade surplus narrowed to about $4 million.
- Jerome Powell will continue his testimony on Thursday.
The NZD/USD pair drifted upwards after the relatively strong New Zealand trade numbers. It rose to a high of 0.6218, a few points abovc this week’s low of 0.6135. In all, kiwi has jumped by more than 3.67% from the lowest level in June.
New Zealand trade rebounds
Copy link to sectionNew Zealand’s economy is not doing well. Data published last week showed that the country sank into a recession in the first quarter after the RBNZ pushed interest rates to a 14-year high. The economy contracted by 0.1% in Q1 after declining by 0.7% in the previous quarter.
The economic numbers released on Thursday showed that the country’s trade improved in May. Exports increased from $6.61 billion in April to $6.99 billion in May. Similarly, imports jumped from $6.37 billion to $6.99 billion. This means that the country’s trade surplus narrowed from $236 million to $4 million.
The Reserve Bank of New Zealand has been one of the most hawkish central banks in the world. It has hiked interest rates from 0% during the pandemic to about 5.50% in a bid to fight inflation. The most recent data showed that New Zealand’s inflation rose by 6.7% in Q1 after rising by 7.2% in the previous quarter.
The next important forex news to watch will be a statement by Jerome Powell, the Federal Reserve chair who will be testifying in congress. In his first day of testimony, Powell reiterated that the battle against inflation was not yet won. He expects that the bank will likely deliver at least two more rate hikes.
The NZD/USD pair will also react to the upcoming US existing home sales numbers. Economists expect that sales dropped slightly in May.
NZD/USD technical analysis
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NZD/USD chart by TradingView
The 4H chart shows that the NZD to USD pair jumped New Zealand trade numbers. It remains slightly above the 25-period and 50-period moving averages. The pair has also jumped above the 50% Fibonacci Retracement level. It is also slightly above the Ichimoku cloud indicator.
Therefore, the pair will likely continue rising as buyers target the next key resistance point at 0.6247, the highest point this month. If this happens, bulls will need to force it above this level to avoid a double-top formation. A double-top is usually a bearish signal.
