Being driven mostly by Australian dollar and China’s economy, actual release of trade balance from the Chinese Ministry of Commerce dragged down the Australian and New Zealand currency.
As the Reserve Bank of New Zealand (RBNZ) does not face such drop in respective sectors as the Australian one (albeit housing market provides some more questions about its performance), strength of its currency does not face such bearish pressures as Aussie. Although the rate-hike path has stopped for couple of months, we expect the progress to continue and motivate to further tightening.
As for China, mostly imports provided a negative sentiment on the market, falling for the 5th month in a row. Australian economy remains sensitive on such development, as China remains its strategic partner for its natural resources and thus directly having impact on the lagging mining sector, the AUD/USD sufferred a drop immediately after the report, as well as NZD/USD.
US data from this week are about to be focused on retail sales data and consumer price index, while the other may provide only a limited short-term impact, if any. From the last Federal Open Market Committee meeting minutes we could see the US currency gaining again, as most of policymakers expect the rate-hike to come this year.
From the fundamental point of view, we remain slightly bearish, cautious over hints from the Reserve Bank of New Zealand, with support from the economy, providing more optimistic outlook as of the Australian one.
From the technical point of view, we expect the NZD/USD to drop to $0.7396, likely to bounce back. Next support could be seen at psychological level $0.7300, further at $0.7238.
In case of negative US data and probable supportive hints
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