NZD/USD: Trading the New Zealand Trade Feb 2014

New Zealand Trade Balance is a key release which is released each month. A reading which is better than the market forecast is bullish for the New Zealand dollar.

Here are all the details, and 5 possible outcomes for NZD/USD.

Published on Wednesday at 21:45 GMT.

Indicator Background

New Zealand Trade Balance is closely related to currency demand, as a foreigners require New Zealand dollars in order to purchase the country’s goods and services.

Trade Balance improved to $523 million in December, its best performance since last March. This figure fell short of the estimate of $550 million. The markets are expecting a much smaller surplus in the upcoming release, with the estimate standing at $230 million.

Sentiments and levels

After the excellent job figures ignited an strong rally, the kiwi rally has slowed down. The general direction of the currency remains higher, especially as a rate hike is widely expected. Nevertheless, we might see overall stability this week, even as the host of upcoming events will certainly supply volatility. So, the overall sentiment is neutral on NZD/USD towards this release.

Technical levels, from top to bottom: 0.8544, 0.8435, 0.8392, 0.8335, 0.8280, and 0.82.

5 Scenarios

1. Within expectations: $200 million to $260 million. In such a scenario, NZD/USD is likely to rise within range,  with a small chance of breaking higher.
2. Above expectations: $261 million to $290 million: An unexpected higher reading can push the pair above one resistance line.
3. Well above expectations: Above $290 million: A surge in the reading would likely bolster the kiwi, and the pair could break a second line of resistance as a result.
4. Below expectations: $170 million to $199 million: A weaker than anticipated reading could push NZD/USD below one support level.
5. Well below expectations: Below $170 million. A very weak reading could hurt the kiwi, and the pair could push below a second level of support.

For more on the kiwi, see the NZD/USD.

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