Better than expected Chinese trade data boost NZD/USD

Better than expected Chinese trade data boost NZD/USD

New Zealand Dollar rises over 0.65% after the release of much better than expected trade data from China; the country’s chief trading partner. The data indicates a probable increase in demand for New Zealand goods from mainland China. Charts are showing the NZD/USD pair now in a messy range-bound market, which is difficult to forecast.

New Zealand’s dollar is rallying strongly on Thursday after the release of much better-than-expected trade data from its largest export partner China.

The NZD/USD pair is up over half a percent at time of publication, trading at 0.6169 at the time of writing. The New Zealand Dollar versus the Euro is up just under half a percent, trading at 0.5641, and NZD/GBP is trading in the 0.4823, up a quarter of a percent.

The New Zealand Dollar benefits from China data’s stardust

The New Zealand Dollar is gaining after the release of Chinese Trade Balance data, which showed an unexpected rise in the trade surplus to $125.16 billion in February, according to data from the General Administration of Customs for the People’s Republic of China, released during Thursday’s Asian session.

Economists had expected the Trade Balance to come out at only $103.70 billion, from a lower $75.34 billion in the previous month of January. The higher surplus is a sign of economic health for the Republic of China and suggests greater prosperity, leading to increased demand for New Zealand exports, primarily milk and dairy products. This, in turn, is likely to result in an increase in demand for New Zealand’s currency from Chinese importers.

There are no major releases for the New Zealand Dollar on the horizon. Electronic Card Retail Sales, the Food Price Index and Visitor Arrivals, next week, are minor data points that are unlikely to move the dial.

The NZD/USD is likely to see volatility after the release of Nonfarm Payrolls (NFP) on Friday, however, and possibly from the second day of Federal Reserve (Fed) Chairman Jerome Powell’s testimony to lawmakers on Thursday.

A less-than-expected NFP result would support the theory that the Fed will soon drop interest rates in order to provide a “soft landing” for the economy. Because lower interest rates are less alluring to investors looking for a place to store their money, earlier interest rate reduction would have weighed on the USD and supported greater increases for the NZD/USD exchange rate.

NZD/USD is currently falling within a disorganised sideways consolidation that has persisted for more than a year. Although it is now rising, it is difficult to predict the trend, which suggests that there is not much overall directional bias.