NZD / USD defends 0.7200, ignores pessimistic New Zealand trade data ahead of RBNZ

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  • NZD / USD consolidates yesterday’s gains, ignores NZ data in cautious weather ahead of RBNZ.
  • New Zealand’s trade balance fell to $ 0.73B in April, exports and imports also fell in April.
  • Market mood remains subdued amid mixed catalysts, reflation fears.
  • The RBNZ can repeat the political status quo, but economic forecasts, statements will be the key.

The NZD / USD is paying some attention to the New Zealand (NZ) trade figures released during Wednesday’s Asian session while taking turns at 0.7220, down 0.05%. Although the Kiwi pair appear to consolidate yesterday’s gains, traders remain concerned ahead of the key event.

New Zealand headlines The trade balance fell sharply from $ 1.7 billion to $ 0.73 billion in April. Details suggest imports slipped below $ 4.98 billion from $ 5.66 billion, while exports fell below $ 5.69 billion to $ 5.37 billion for the month indicated.

The market’s lack of reaction to the New Zealand data could be attributed to a feeling of caution ahead of a bigger event for NZD / USD traders, namely the Reserve Bank of New Zealand monetary policy meeting ( RBNZ).

Conflicting messages from policymakers at the US Federal Reserve (Fed) regarding inflation risks could also contribute to the gloom. Additionally, pessimistic US data and the lack of major catalysts are adding to the market indecision lately.

It should be noted, however, that the US Dollar Index (DXY) bears the brunt of this moderate trading and has fallen back to its lowest since early January the day before. The 10-year US Treasury yield was also oriented south, which cooled to its monthly low. That said, the S&P 500 Futures shows small gains even as Wall Street closed with lower losses.

Going forward, the RBNZ rate decision, which is due to be released at 02:00 GMT, is key for NZD / USD traders, although policymakers are not expected to change the benchmark rate or schedules. purchase of bonds. The crucial part of today’s event will be economic forecasts and statements relating to inflationary pressure inside the country that was the first to defeat the coronavirus (COVID-19).

Ahead of the publication, Westpac said, “We expect the RBNZ’s monetary policy statement to leave the policy parameters unchanged. The economic outlook has improved overall, despite weak growth growth during the summer period. Inflation is likely to exceed 2% this year, but the RBNZ has already predicted it and will see it as temporary. We expect April’s trade balance to post a larger surplus of $ 390 million as imports slow after a catch-up in March. “

Read: RBNZ Preview: Improve economic but even political performance

Technical analysis

Failure to break through the 12 day old downtrend line around 0.7240 pushes the NZD / USD down to 0.72015, including a 21 day SMA. However, any further downside will be contested by a 50 day SMA level of 0.7140. Overall, the pair of kiwis remain in consolidation mode.

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