Over the weekend, as the G7 summit began in France, the trade war between the US and China intensified. China retaliated to the planned US tariffs in kind, and US President Trump vowed to increase all existing tariffs by 5%. As the global economy continues to cool, New Zealand reported a bigger-than-expected trade deficit for July. This was due to the surge in imports while exports remains nearly unchanged from June. The New Zealand Dollar remained stable as export figured were a sigh of relive for forex traders and the NZDUSD rebounded inside a strong horizontal support area. Will price action attempt a breakout on the back of a short-covering rally? This morning’s fundamental analysis will take a look at the upside potential and evaluate any downside risk from current levels.
Forex traders will start the new trading week with three key US economic reports which will give further insight if US Fed Chief Powell’s remarks on the health of the US economy, made at last week’s Jackson Hole Symposium, were accurate. Preliminary durable goods orders will be in focus as economists anticipate a flat reading excluding transportation. Two regional reports, out of Chicago and Dallas, are also favored to show weak figures. Will this result in US Dollar weakness? As the global economy slows down further, Trump is further escalating his trade war. How will this influence the NZDUSD? Subscribe to the PaxForex Daily Fundamental Analysis and take the profitable side of this trade!
Here is the key factor to keep in mind today for New Zealand Dollar trades:
- New Zealand Trade Balance: The New Zealand Trade Balance for July was reported at -NZ$685M monthly and at -NZ$4,463M 12-month year-to-date. Economists predicted a figure of -NZ$254M and of -NZ$5,012M. Forex traders can compare this to the New Zealand Trade Balance for June which was reported at NZ$365M monthly and at -NZ$4,937M 12-month year-to-date. Exports for July were reported at NZ$5.03B and Imports were reported at NZ$5.71B. Economists predicted a figure of NZ$5.05B and of NZ$5.20B. Forex traders can compare this to Exports for June which were reported at NZ$5.01B and to Imports which were reported at NZ$4.65B.
Here are the key factors to keep in mind today for US Dollar trades:
- US Chicago Fed National Activity Index: The US Chicago Fed National Activity Index for July is predicted at 0.05. Forex traders can compare this to the US Chicago Fed National Activity Index for June which was reported at -0.02.
- US Preliminary Durable Goods Orders: US Preliminary Durable Goods Orders for July are predicted to increase by 1.0% monthly and Durables Excluding Transportation are predicted flat at 0.0% monthly. Forex traders can compare this to US Durable Goods Orders for June which increased by 1.9% monthly and to Durables Excluding Transportation which increased by 1.0% monthly. Capital Goods Orders Non-Defense Excluding Aircraft for July are predicted flat at 0.0% monthly and Capital Goods Shipments Non-Defense Excluding Aircraft are predicted to increase by 0.3% monthly. Forex traders can compare this to Capital Goods Orders Non-Defense Excluding Aircraft for June which increased by 1.5% monthly and to Capital Goods Shipments Non-Defense Excluding Aircraft which increased by 0.3% monthly.
- US Dallas Fed Manufacturing Activity Index: The US Dallas Fed Manufacturing Activity Index for August is predicted at -4.5. Forex traders can compare this to the US Dallas Fed Manufacturing Activity Index for July which was reported at -6.3.
Should price action for the NZDUSD remain inside the or breakout above the 0.6340 to 0.6410 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.6375
- Take Profit Zone: 0.6585 – 0.6665
- Stop Loss Level: 0.6580
Should price action for the NZDUSD breakdown below 0.6340 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.6315
- Take Profit Zone: 0.6170 – 0.6235
- Stop Loss Level: 0.6340
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