February 27th 2020
The New Zealand trade balance for January clocked in at a smaller-than-expected deficit, based on a smaller slowdown in exports. Souring the report was a steeper contraction in business confidence, resulting from the coronavirus, which continues to spread globally. The NZDUSD is now in a holding pattern inside of its horizontal support area until key US economic data will be released. Where is this currency pair headed to next? Today’s fundamental analysis will take a look at price action in both directions.
Forex traders await a dose of key US economic data today. Durable goods orders are expected to post a contraction, but Capital Goods Orders Non-Defense Excluding Aircraft are called marginally higher. The final fourth-quarter GDP is anticipated to show a downward revision to private consumption. How will price action in the NZDUSD react following today’s data? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Here are the key factors to keep in mind today for New Zealand Dollar trades:
- New Zealand Trade Balance: The New Zealand Trade Balance for January was reported at -NZ$340M monthly and at -NZ$3,866M 12-month year-to-date. Economists predicted a figure of -NZ$549M and of -NZ$3,940M. Forex traders can compare this to the New Zealand Trade Balance for December, which was reported at NZ$547M monthly and at -NZ$4,309M 12-month year-to-date. Exports for January were reported at NZ$4.73B, and Imports were reported at NZ$5.07B. Economists predicted a figure of NZ$4.44B and NZ$5.00B. Forex traders can compare this to Exports for December, which were reported at NZ$5.54B and to Imports, which were reported at NZ$5.00B.
- New Zealand ANZ Activity Outlook and ANZ Business Confidence: The New Zealand ANZ Activity Outlook for February was reported at 12.0, and ANZ Business Confidence was reported at -19.4. Forex traders can compare this to the New Zealand ANZ Activity Outlook for January, which was reported at 17.2 and to ANZ Business Confidence, which was reported at -13.2.
Here are the key factors to keep in mind today for US Dollar trades:
- US Preliminary Durable Goods Orders: US Preliminary Durable Goods Orders for January are predicted to decrease by 1.5% monthly, and Durables Excluding Transportation are predicted to increase by 0.2% monthly. Forex traders can compare this to US Durable Goods Orders for December, which increased by 2.4% monthly and to Durables Excluding Transportation, which decreased by 0.1% monthly. Capital Goods Orders Non-Defense Excluding Aircraft for January are predicted to increase by 0.1% monthly, and Capital Goods Shipments Non-Defense Excluding Aircraft are predicted to increase by 0.1% monthly. Forex traders can compare this to Capital Goods Orders Non-Defense Excluding Aircraft for December, which decreased by 0.8% monthly and to Capital Goods Shipments Non-Defense Excluding Aircraft, which decreased by 0.3% monthly.
- US GDP: The Advanced US GDP for the fourth-quarter is predicted to increase by 2.1% annualized. Forex traders can compare this to the previous fourth-quarter GDP, which increased by 2.1% annualized. Corporate Profits are predicted to increase by 0.6% annualized. Forex traders can compare this to previous fourth-quarter Corporate Profits, which increased by 0.6% annualized. Personal Consumption for the fourth-quarter is predicted to increase by 1.7% annualized. Forex traders can compare this to the previous fourth-quarter Personal Consumption, which increased by 1.8% annualized. The GDP Price Index for the fourth-quarter is predicted to increase by 1.4% annualized. Forex traders can compare this to the previous fourth-quarter GDP Price Index, which increased by 1.4% annualized. The Core PCE for the fourth quarter is predicted to increase by 1.3% annualized. Forex traders can compare this to the previous fourth-quarter Core PCE, which increased by 1.3% annualized.
- US Initial Jobless Claims and Continuing Claims: US Initial Jobless Claims for the week of February 22nd are predicted at 212K and US Continuing Claims for the week of February 15th are predicted at 1,715K. Forex traders can compare this to US Initial Jobless Claims for the week of February 15th, which were reported at 210K and to US Continuing Claims for the week of February 8th, which were reported at 1,726K.
- US Pending Home Sales: US Pending Home Sales for January are predicted to increase by 2.0% monthly and 5.7% annualized. Forex traders can compare this to US Pending Home Sales for December, which decreased by 4.9% monthly, and which increased by 6.8% annualized.
- US Kansas City Fed Manufacturing Activity Index: The US Kansas City Fed Manufacturing Activity Index for February is predicted at -2. Forex traders can compare this to the US Kansas City Fed Manufacturing Activity Index for January, which was reported at -1.
Should price action for the NZDUSD remain inside the or breakout above the 0.6285 to 0.6355 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.6325
- Take Profit Zone: 0.6485 – 0.6525
- Stop Loss Level: 0.6250
Should price action for the NZDUSD breakdown below 0.6285 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.6250
- Take Profit Zone: 0.6170 – 0.6200
- Stop Loss Level: 0.6285
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