New Zealand trade deficit smaller than expected
The New Zealand dollar opened slightly higher on Monday during the Asian trading session, with the gains reflecting the weakness in the U.S. dollar along with the news of improved trade balance figures for the month of December. NZDUSD rose to intraday session highs of $0.7280 before giving back the gains.
The New Zealand dollar posted gains on the day after on Sunday
The data from Statistics New Zealand showed that the economy posted a trade deficit of 41 million NZD. In the twelve months through December 31, New Zealand trade deficit was recorded at 3.2 billion NZD, as forecast by economists.
The trade deficit came about as dairy prices continued to trend lower while volumes were seen rising. In the latest quarter, volumes were down but prices turned higher helping to minimize the deficit alongside a drop in meat prices. The total value of export goods was recorded at $48.4 billion NZD.
Part the volatile was due to a weaker U.S. dollar. Investors grew nervous after weekend decisions by President Trump ordering tighter immigration rules boosted risk aversion as investors grew cautious. On Friday, the U.S. GDP figures for the fourth quarter showed a smaller than forecast gain, with the economy expanding just 1.9%, less than the 2.1% forecast and down from Q3's 3.5% gain.
How to trade binary?
The New Zealand dollar rose to a two-year high late last week, briefly trading above $0.7287 before giving up some of the gains which was supported by better than expected quarterly inflation report in the three months ending December. However the technical rally is showing signs of exhaustion already which could mean that there is further downside expected.
The 4-hour chart for NZDUSD shows that further downside could be coming but support at 0.7235 will need to be breached for the downside to be confirmed. Therefore, traders should look at purchasing PUT options below 0.7235 for 21:00 GMT expiry.
Target price: 0.7235
Expiry: 21:00 GMT