NZD/USD pops a handful of pips to 0.6860 on trade surplus

• Trade balance for May shows a surplus of 294m
• NZD/USD was a poor performer on the overnight sessions.
• ANZ Business Outlook survey will be watched closely.
• A steady hand from the RBNZ will be expected.

NZD/USD is currently trading at 0.6860 having made a high of 0.6902 overnight and a low of 0.6846 in NY as the weakest in the G10 space ahead of the RBNZ decision this week. On the trade balance data, the pair moved from 0.6849 the low to 0.6859 as the headline arrived as +294m vs the expected +100m showing a surplus for May vs the prior surplus 193m, revised from 263m.

• NZ Trade Balance surges to $294 million in second-best month ever for exports

Exports in NZD terms came in at 5.42bn vs the expected 5.25bn, prior 4.96bn, revised from 5.05bn while imports in NZD as terms arrived  5.12bn vs the expected 5.10bn and prior 4.77bn, revised from 4.79bn. Finally, for the 12 months year to date, there was a deficit of 3598m NZD vs the expected -3743m, prior -3830m. Traders will now turn their heads to the  ANZ Business Outlook survey, (with a small (NZD100mn) surplus expected for the month but the annual deficit around –NZD3.7bn), that could be watched more closely ahead of tomorrows RBNZ. 

RBNZ expectations

A steady hand from the bank will be expected and rates to be left at 1.75% is assured. However, there will be keen interest in the language of the statement since the markets have seen a soft NZ Q1 GDP but expansive fiscal policy.

NZD/USD levels

NZD/USD Technical Analysis: flirting with an important horizontal support

Support is located at 0.6820 while resistance is located at 0.6980. 0.6780 comes as next downside target meeting the lows of mid-Nov 2017. On the upside, albeit not favoured, above 0.6980 lies the 50-D SMA at  0.7002 and then 0.7060 guarding space en route to 0.7440 as the January tops on the wide.