New Zealand dollar remains weak after downbeat trade report
The New Zealand dollar retreated against the U.S. dollar on Tuesday, yet it found support to pare some of its losses, after a report showing New Zealand posted its biggest 12-month trade deficit in six years.
A report released today showed that the trade gap reached $2.6bn in the year ended April, which is highest since June 2009, when it registered $3.1bn.
The rise in the deficit was underpinned by the drop in the prices of dairy products and the sluggish demand from China.
The kiwi recorded its fifth straight weekly decline last week amid speculations the RBNZ would cut interest rates.
Although the RBNZ left the interest rate unchanged at 3.5 percent in April, the bank mentioned it would be appropriate to lower interest rates if demand weakened.
The Treasury Department has slashed its growth predictions to 2.9 percent in the year through March 2016, compared to 3.3 percent a year earlier, while it estimated in December a 3.2 percent expansion for 2015-16.
Later in the day, eyes will focus on U.S. durable goods and consumer confidence data, following the dovish comments from Fed Chair Janet Yellen on Friday.
Yellen hinted to the Fed will raise interest rates this year if the economy shows improvement, helping the dollar to resume its rebound versus majors.
The kiwi dollar did not take advantage from the greenback’s drop over the previous couple of weeks, where it resumed its fall to trade around 0.7295 after it posted a low of 0.7265.
As of 11:38 GMT, the AUDUSD traded lower at 0.7801 after hitting a bottom of 0.7770.
The breakout of the support line depicted on the daily chart as well as the bearish cross of the SMA 20 over SMA 50 have boosted the recent downside fall.
However, the pair has found some support from near the 78.6% Fibo level of the upside wave which began in early March.
The Stochastic Oscillator momentum indicator also points the pair is oversold and may start some upside correction.