New Zealand Dollar to US Dollar (NZD/USD) Exchange Rate Hits Three-Week Low
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The commodity-driven asset has been deriving underlying support from last week’s Reserve Bank of New Zealand rate decision and during the local session investors engaged in a bout of profit taking.
The New Zealand Dollar declined as a result, edging away from its recent 2 ½ year high against its US counterpart.
As Australasian trading drew to a close the ‘Kiwi’ remained softer despite the fact that New Zealand’s trade data for March showed that the nation’s trade surplus widened.
Key events for the week ahead
Trade Balance (April 28)
Gross Domestic Product (April 29)
With China snapping up New Zealand’s dairy products, the nation’s exports jumped to a record level of 50.06 billion Dollars in the 12 months to March.
As a result New Zealand’s trade surplus swelled to 805 million Dollars.
The nation’s trade balance advanced to a seasonally-adjusted 920 million Dollars, up from 818 million Dollars the previous month.
In the opinion of one Auckland based forex dealer; ‘The trade balance data was pretty much as expected. 85.20 US cents has decent support for the time being – it may have done enough to attract some buyers out of the woodwork.’
Similarly, a BNZ official observed; ‘There were few surprises in New Zealand’s merchandise trade figures for March. The data confirmed strong growth in two-way external trade, as well as a healthy trade surplus. So it’s supportive of ongoing economic growth and further narrowing in the current account deficit.’
The New Zealand Dollar was barely affected as an announcement was given by the Opposition Labour Party regarding an intention to overhaul the Reserve Bank Act in the event of their election victory.
While the ‘Kiwi’ closed the local session broadly softer, losses in the asset were limited as a measure of currency volatility tumbled to an almost seven-year low and tensions in Ukraine eased.
As the week continues there are several economic reports for New Zealand to be aware of, including the nation’s building permits figures, activity outlook gauge and business confidence index.
Given that China is one of New Zealand’s main trading partners, Chinese manufacturing PMI (due out on Thursday) is also likely to have an impact on the New Zealand Dollar exchange rate.
China’s manufacturing PMI is forecast to advance from 50.3 to 50.5 in April, moving further away from the 50 mark separating growth from contraction.
Of course the week’s US news, including national growth and employment figures and the Federal Open Market Committee’s policy announcement, may trigger extensive currency market movement.
The New Zealand Dollar is currently trading against the British Pound in the region of 0.5062 and is trading against the US Dollar in the region of 0.8527.