Overnight the New Zealand dollar reached its highest level versus the US dollar since February 2008 on the strength of significantly better than forecasted trade balance data as the Kiwi builds on gains from last week.
Comments by New Zealand Prime Minister John Key touched on the strength of the Kiwi which knocked the NZD/USD off of a 3-year high. Earlier in the Asian trading session the pair reached as high as 0.8214 before trading back to 0.8170.
Helping to boost the Kiwi was significantly stronger than expected trade balance which showed a surplus of 1,113M NZD for the month of April. The data handedly beat expectations for 603M NZD. The tone of the report was further boosted by the March numbers which were revised higher to 578M NZD from a previously reported 464M.
The trade balance numbers are quite the feat following the Christchurch earthquake in February and show the improvement in New Zealand exports and terms of trade. Today’s trade balance data should further support a bullish case for the Kiwi. Last week the New Zealand dollar rose sharply following reports of Chinese interest in diversifying the nation’s FX reserves and setting aside up to 1.5% to invest in New Zealand assets and government bonds.
While the NZD/USD hit a 3-year high overnight the AUD/NZD also reached a significant technical level, falling to the trend line off of the November and January lows at 1.3010. A breach here and the AUD/NZD would target a range between the January pivot at 1.2775 and 1.2470, the latter being the 61.8% retracement level from the 2010 low to the May 2011 high. The November low at 1.2640 would be a last stand for the Aussie dollar.
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