The Kiwi dollar remained range-bound against the loonie yesterday following the release of weak economic data from both New Zealand and Canada. While New Zealand’s trade deficit data for October missed estimates, Canada’s inflation data was unimpressive. Overall, the NZD/CAD pair traded in a narrow range of between 0.8308 and 0.8352 in the past 24 hours.
According to Statistics New Zealand, the country’s trade deficit narrowed to N$1.71 billion in October from N$2.32 billion in September, higher than forecasts of N$1.15 billion.
Goods exports declined by 9.30% (or N$552 million) to N$5.40 billion in October 2023, compared with October 2022. Meat and edible offal exports decreased by 8.50% (or N$50 million) to N$534 million. Fruit exports fell by 71% (or N$111 million) to N$46 million.
Goods imports dipped by 14% (or N$1.20 billion) to N$7.10 billion in October 2023, compared with a similar month last year. Imports of mechanical machinery and equipment decreased by 11% (or N$132 million) to N$1 billion. Likewise, imports of electrical machinery and equipment declined by 17% (or N$131 million) to N$652 million. Vehicles, parts, and accessories fell by 11% (or N$130 million) to N$1.10 billion. Petroleum and product imports decreased by 2% (or N$19 million) to N$925 million.
Furthermore, goods exports were N$69.70 billion in the year ended October 2023, a decrease of N$1.20 billion from last year. Goods imports were N$84.50 billion in the year ended October 2023, a decline of N$266 million from the year ended October 2022. Overall, the trade deficit was N$14.80 billion in the year ended October 2023. This compares with a deficit of N$13.90 billion in the year ended October 2022.
According to Statistics Canada, the country’s consumer price index inched up 0.10% m-o-m in October, following a 0.10% decline in the previous month and line with economists’ estimates. The monthly increase was mainly led by travel tours and property taxes.
On a y-o-y basis, Canada’s consumer price index grew by 3.10% y-o-y in October 2023. In September, the country’s consumer price index rose by 3.80% year-on-year. The easing of annual inflation was mainly due to a 7.80% y-o-y drop in the price of gasoline in October. Excluding gasoline, the consumer price index grew by 3.60% y-o-y in October, following a 3.70% rise in September.
Prices for goods grew by 1.60%, and prices of services surged by 4.60% in October.
The weak economic data is expected to keep the NZD/CAD pair range-bound in the short term.
The historical price chart indicates that the NZD/CAD pair is rallying after testing the support at 0.8205. The next resistance is anticipated to be only near 0.8430. Additionally, the currency pair is trading above its 50-day moving average, while the stochastic indicator is in the bullish zone. Therefore, we anticipate the NZD/CAD pair to remain in an uptrend in the short term.
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.
