NZDUSD Resume Uptrend on Better China and NZ Economic Data

The USD to NZD rate has moved from a period of consolidation into a potential upward trend due to weaker US labor market data and the resultant USD weakness. The breakout above the 200-day SMA is a key technical development, providing a new support level for the pair. Continued monitoring of US economic data and the pair’s behavior around the 200-day SMA will be crucial for assessing the sustainability of this upward trend.

NZD/USD Chart Daily – The 200 SMA Has Turned Into Support Now

Softer employment statistics from the US, including the recent ADP employment figures and the JOLTS report, have pointed to a weakening US labor market. This trend has dampened the USD, which has led to some renewed bullish momentum in this New Zealand dollar against the USD so far in June. NZD/USD managed to surpass the 200-day Simple Moving Average (SMA), which had been acting as resistance and now this pair is stabilizing above this moving average, which has shifted to a support indictor, while NZD buyers were knocking on the 0.92 door in the last two days.

The New Zealand Dollar (NZD) has been supported by positive economic data from both New Zealand and China, along with expectations of future Federal Reserve interest rate cuts due to weak US economic statistics. Here’s a detailed analysis:

New Zealand Export Volumes and Terms of Trade

  • Export Volumes: There was a notable increase in export volumes in Q1.
  • Terms of Trade: The Terms of Trade index, which measures the ratio of export prices to import prices, increased by 5.1% after a significant decline of 7.8% in the previous quarter. This improvement indicates that New Zealand is receiving higher prices for its exports relative to what it pays for imports, enhancing the country’s trade position and supporting the NZD.

Caixin China Services PMI

  • PMI Data: The Caixin China Services PMI rose to 54.0 in May, exceeding estimates of 52.6 and the previous level of 52.5. This marks the 17th consecutive month of growth in services activity, and the strongest rate since July 2023.
  • Impact on NZD: As China is a major trading partner for New Zealand, positive economic data from China typically supports the NZD. Strong growth in China’s services sector suggests robust demand, which is beneficial for New Zealand’s exports.

US Economic Data and Fed Rate Expectations

  • Weak US Economic Data: A series of disappointing US economic statistics, particularly in the labor market, has increased the likelihood of the Federal Reserve cutting interest rates.
  • Fed Rate Cut Expectations: Growing anticipation that the Fed will begin lowering interest rates after the September meeting has put downward pressure on the USD, making the NZD more attractive.

ANZ Commodity Prices for May

  • Commodity Price Index for May +1.1% m/m (prior 0.5%)

ANZ on Global shipping prices:

  • May Shipping Price Trends:
    • Baltic Dry Index: Eased slightly during May.
    • China Containerised Freight Index: Increased.
    • Harper Peterson Index: Increased.
  • Charter Ship Demand:
    • Control and Flexibility: Exporters are increasingly opting for charter ships, which allow for more control over shipping routes and departure dates.
    • Fresh Produce: This is especially important for transporting fresh produce with limited shelf life.
  • Shipping Route Disruptions:
    • Longer Routes: To avoid high-risk areas, longer shipping routes are being used, causing congestion at international ports.
    • Container Shortage: The longer routes and port congestion have led to a shortage of shipping containers.

NZD/USD Live Chart

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Skerdian Meta
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Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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