Nzdusd rises as New Zealand trade balance improves and US manufacturing sector slows

NZDUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	1.1%	62.7 Pips
Week to-date	0.48%	27.7 Pips
February	2.21%	124.3 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

In New Zealand, the trade balance improved slightly in January, with the deficit reducing from a revised figure of -7.67$ in December to -7.22$. This improvement came amidst an increase in imports, which rose to $6.68 billion from $6.62 billion in the previous month. Conversely, exports declined to $6.19 billion, down from a revised $6.67 billion in December. This suggests that while the trade deficit has narrowed, the reduction was primarily due to higher import figures rather than export growth. Additionally, the Reserve Bank of New Zealand lowered the official cash rate to 3.75% from a previous 4.25%, signaling a potentially more accommodative monetary policy stance, likely aimed at stimulating economic activity amid trade challenges.

In the United States, the economic indicators reveal mixed results. The initial unemployment claims rose slightly to 219K from 213K, indicating a marginal increase in jobless claims. The Manufacturing Business Outlook Survey saw a sharp decline from 44.3 points in January to 18.1 points in February, suggesting a significant slowdown in manufacturing sector sentiment. However, building permits increased marginally to 1.483 million in January from a revised 1.482 million in December, pointing to a steady supply in the construction pipeline. Nonetheless, housing starts showed a decline, dropping to 1.366 million from a revised figure of 1.515 million. Collectively, these figures depict a mixed economic outlook with potential slowing momentum in some areas, such as manufacturing and housing starts.

The NZDUSD exchange rate’s 1.1% rise to 0.57607 on Thursday reflects changing economic dynamics. The decision by New Zealand to lower interest rates could have contributed to a depreciative pressure on the NZD, but improved trade balance figures provided some support. In contrast, a dip in U.S. manufacturing outlook alongside rising unemployment claims might have weakened the USD, providing upward momentum for the NZDUSD rate. The relatively calm market conditions with the lack of major events on the day likely allowed these economic factors to play a larger role in driving the exchange rate movements. Moving forward, the interplay between New Zealand’s monetary policy and the U.S. economic data will continue to influence the direction of the NZDUSD.

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What can we expect from NZDUSD today?

NZDUSD on Thursday rose 1.1% to 0.57607. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for NZDUSD looks bullish as the pair ended higher after Thursday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 0.57876 with break above could target R2 at 0.58145 or figure level area. While towards the downside, we are looking at daily low of 0.56930 as an important support. Break below this level could weaken the current bullish momentum. A break above 0.57672 may suggest continuation after recent positive movement.

For the week to-date, take note that NZDUSD is bullish as the pair continued to trade higher and is up by 0.48% over the past few days.

Key levels to watch out:

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