Kiwi jumps after impressive trade data
The New Zealand dollar rose sharply today after the country released its trade data for May. Data showed that exports increased to N$5.81 billion from the previous N$5.50 billion. This was higher than the consensus estimate of more than N$5.61 billion. In the same month, imports rose to N$5.54 billion, from the previous N$5.12 billion. As a result, the trade surplus increased to N$264 million, which was better than the consensus estimate of N$200 million.
The US dollar continued to weaken as the expectations of rate cuts continued to increase. The dollar index, which tracks the currency against a basket of other international currencies declined by 0.10% in the Asian session. It reached a low of 95.9, which was the lowest level in more than three months. In last week’s meeting, the Federal Reserve left rates unchanged but signaled possible easing on rising uncertainties about the economic growth. As a result, the markets are now pricing in at least two rate cuts this year. Later today, investors will receive the home sales and the house price index data.
The yen strengthened against the USD after the BOJ released minutes of the previous meeting. The minutes showed that members deliberated on the need to be vigilant over the rising cost of the prolonged easing, which has led to negative interest rates. In the meeting, the bank’s officials agreed to leave rates unchanged at the current minus 0.1%. The strength also happened as the country planned to host the G20 meeting. In addition, there will likely be tensions as President Trump ponders on how to change the defense agreement with Japan. The President believes that as a rich country, Japan should pay for its own security.
The EUR/USD pair continued to rise, reaching a high of 1.1410. This was the highest level since March 25. On the eight-hour chart, the price is above the 25-day and 50-day moving averages. The RSI has also moved higher to above the overbought level of 70. The signal and RVI lines of the Relative Vigor Index have continued to move higher. While the pair could continue the upward trend, it is likely that a pullback could happen.
The NZD/USD pair continued the upward trend started on June 18 when it formed a double bottom pattern at 0.6486. Today, the pair reached a high of 0.6652, which is the highest level since June 10. This price is above the 25-day and 50-day moving averages. The RSI has moved to above the overbought level of 70. The price is along the upper line of the Bollinger Bands. The pair could continue moving higher to the important resistance level of 0.6680.
The USD/JPY pair continued to decline, reaching a low of 106.87, which is the lowest level since January 10. On the daily chart, this price is slightly below the 50-day and 25-day moving averages. It is also below the longer-dated 200-day moving averages. The RSI has dropped to below the oversold level of 30 while the accumulation/distribution indicators have continued to soar. The pair will likely continue moving lower as traders wait for the G20 meeting.