The Kiwi dollar gained ground against the greenback yesterday following the release of better-than-anticipated New Zealand’s trade balance data for December. There were no other economic data releases yesterday. The NZD/USD pair rallied from a low of 0.6090 to a high of 0.6120 in the past 24 hours.
According to Statistics New Zealand, the country’s trade deficit narrowed to N$323 million in December from N$1.25 billion in November, bettering forecasts of a N$975 million deficit.
Exports fell by 8.70% y-o-y (or N$568 million) in December to N$5.90 billion. Likewise, imports declined 13% y-o-y (or N$896 million) to N$6.30 billion.
Exports of crude oil grew by 125%y-o-y (or N$85 million) in December. While iron, steel, and articles recorded a surge of 87% y-o-y (or N$44 million), meat and edible goods rose by 5.10% (or N$39 million). Mechanical machinery and equipment posted a rise of 15% y-o-y (or N$30 million) in December.
Exports of milk powder, butter, and cheese fell by 23% y-o-y (or N$520 million). Similarly, wood pulp and waste paper declined 40% y-o-y (or N$37 million).
Imports of petroleum and products grew by 115% y-o-y (or N$534 million) in December. Similarly, sugar and sugar confectionary imports grew by 42%y-o-y (or N$21 million). Imports of pharmaceutical products rose by 8.70% (or N$16 million).
Imports of aircraft and parts declined 82% y-o-y (or N$251 million) in December. Vehicles, parts, and accessories imports fell by 17% (or N$180 million). Also, electrical machinery and equipment posted a decrease of 20% (or N$123 million). Food residues, wastes, and fodder reported a drop of 55% (or N$107 million).
Furthermore, goods exports inched up 1.60% q-o-q (or N$270 million) in the December quarter following an 8.50% decline in the September quarter. Similarly, goods imports declined 2.60% (or N$521 million) in 4Q 2023 compared with a 4% decrease in 3Q 2023. Therefore, the quarterly trade deficit stood at N$2.60 billion.
Goods exports stood at N$68.70 billion in 2023, a decrease of N$3.30 billion from 2022. Goods imports were N$82.30 billion in 2023, down N$4.30 billion from last year. Overall, the trade deficit was N$13.60 billion in 2023. In the previous year, New Zealand had recorded a deficit of N$14.60 billion.
The narrowing of the trade deficit is expected to make the NZD/USD pair slightly bullish in the near term.
The better-than-anticipated New Zealand trade balance data is expected to keep the New Zealand dollar slightly bullish against the US dollar in the near term.
The historical price chart indicates that the NZD/USD pair is rising after consolidating at 0.6090 levels. The next resistance is anticipated to be only near 0.6280. Additionally, the currency pair is trading above its 50-day moving average, while the stochastic indicator is rising towards the bullish zone. Therefore, we anticipate the NZD/USD pair to remain in an uptrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
