Upbeat NZ Trade Balance Weighs on AUD/NZD
The Australian Dollar New Zealand Dollar (AUD/NZD) exchange rate traded in a narrow range on Tuesday following the release of New Zealand’s latest trade figures.
At the time of writing AUD/NZD is holding close to the session’s opening levels after the pairing recovered from its losses earlier in the morning.
New Zealand Dollar (NZD) Bolstered as Trade Heats Up
The New Zealand Dollar was able to recoup Monday’s losses against the Australian Dollar in today’s session as markets were pleasantly surprised by the latest NZ trade balance.
According to data published by Statistics New Zealand, the domestic trade balance surged from a deficit of -NZ$1.2bn to a surplus of NZ$0.6bn in December.
This easily surpassed expectations of a more modest uptick to –NZ$0.1bn and was the strongest December reading on record.
Annualised data also revealed that exports and imports rose 25.7% and 11.2% respectively, leading both to reach new record highs in 2017, although analysts warn this may not last long.
Westpac senior economist, Michael Gordon said;
‘The main surprise was a surge in exports to a new record high, though this is likely to be short-lived’
Statistics New Zealand also reported that New Zealand’s exports have benefited from robust global dairy prices over the last year, while its largest trading partner remains China for the fourth consecutive year.
Australian Dollar (AUD) Shows Resilience as Business Confidence Rises
Meanwhile helping to prevent any major losses for the Australian Dollar on the back of New Zealand’s trade figures was the release of NAB’s Business Confidence figures.
The latest figures revealed that businesses became increasingly optimistic at the end of last year, with the sentiment index rising from 7 to 11 in December, just below forecasts it would rise to 12.
However despite missing targets it was still the highest reading since July and reflected the rising confidence in the global economy.
While the uptick in confidence was fairly broad based one sector didn’t share in the jubilation, with retailers remaining a bit more pessimistic, likely on the back of slowing sales at the end of the year.
AUD/NZD Forecast: Uptick in Inflation to Bolster ‘Aussie’?
Looking ahead the AUD/NZD may be able to trend higher again on Wednesday with the publication of Australia’s latest CPI figures.
Economists forecast that the data will show that inflation ticked up from 0.6% to 0.7% in the fourth quarter.
However both currencies may face some volatility against one another as well as the majors overnight following Trump’s state of the Union address, with a resulting jump in the US Dollar (USD) likely to cause havoc with the pairing.