Record New Zealand Exports Fail to Lift NZDUSD

Talking Points

• New Zealand’s trade surplus widened in March to $920 million from a revised $793 million in February
• Exports jumped 15 percent in March to a record $5.08 billion
• Imports grew 13 percent to $4.16 billion

New Zealand’s economic health assessment received a boost this morning, but the data wasn’t convincing enough to lift the country’s currency. The Statistics New Zealand group reported a surplus of NZ$920 million. This positive balance was a substantial improvement from the previous month’s downwardly revised NZ$793 million gap and the ‘best’ reading for the series since the record set back in April 2011. However, this impressive showing was likely deflated somewhat by the fact that it was only a modest beat of the consensus (NZ$900 million) and a peak around this time of year is an expected seasonal factor.

Nevertheless, the details of the account further support a strong economic read for New Zealand. Exports grew to NZ$5.08 billion through the month – a record. Imports were similarly on the rise with a jump back to NZ$4.16 billion. This is a reflection of strong foreign demand for the country’s goods as well as robust domestic activity. That said, as much as this supports economic activity, yield expectations may carry more weight with the FX market. Though the RBNZ has already executed two rate hikes, expectations for a steady hawkish regime have declined sharply over the past few weeks. It seems that this round of data will not single-handedly change this retreat.

DailyFX Senior Technical Strategist Jamie Saettele points out that NZD/USD nears April lows and noted that “only a rise above 0.8592 would negate the immediate bearish outlook.”

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NZDUSD (5min chart) – April 29, 2014

Chart created using FXCM Marketscope