The Reserve Bank of New Zealand kept interest rates on hold at 1.00% as was widely expected by market participants. The New Zealand Dollar was able to extend its rally after the central bank announcement. The trade deficit for August came in bigger than expected on the back of higher imports while exports clocked in slightly higher than expected. Is more upside in the NZDUSD possible? Subscribe to the PaxForex Daily Fundamental Analysis and follow the advice of our expert analysts which will yield you over 5,000 pips per month in profits.
The US trading session may be more quiet than usual with new home sales the sole market moving report. Economists expect a small rebound in August following the severe plunge in July. The housing market contributes to the wealth effect in US consumers which causes them to borrow and spend. Will the NZDUSD rally further following the release of US housing data? Today’s fundamental analysis will take a look at the upside potential as well as downside risk in this currency pair.
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 August was reported at -NZ$1,565M monthly and at -NZ$5,484M 12-month year-to-date. Economists predicted a figure of -NZ$1,400M and of -NZ$5,400M. Forex traders can compare this to the New Zealand Trade Balance for July which was reported at -NZ$700M monthly and at -NZ$5,485M 12-month year-to-date. Exports for August were reported at NZ$4.13B and Imports were reported at NZ$5.69B. Economists predicted a figure of NZ$4.10B and of NZ$5.58B. Forex traders can compare this to Exports for July which were reported at NZ$4.96B and to Imports which were reported at NZ$5.66B.
- Reserve Bank of New Zealand Interest Rate Announcement: The Reserve Bank of New Zealand kept interest rates unchanged at 1.00%. Economists predicted no change in interest rates. Forex traders can compare this to Reserve Bank of New Zealand previous interest rate announcement were rates were left unchanged at 1.00%.
Here is the key factor to keep in mind today for US Dollar trades:
- US New Home Sales: US New Home Sales for August are predicted to increase by 3.3% monthly to 656K new homes. Forex traders can compare this to US New Home Sales for July which decreased by 12.8% monthly to 635K new homes.
Should price action for the NZDUSD remain inside the or breakout above the 0.6285 to 0.6340 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.6320
- Take Profit Zone: 0.6510 – 0.6585
- 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 @ 0.6235
- Take Profit Zone: 0.5995 – 0.6125
- Stop Loss Level: 0.6285
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