NZD/USD confronts 10-day EMA ahead of New Zealand Trade Balance, RBNZ

• NZD/USD stops further advances ahead of the key data/events.
• Trade optimism has recently faded but the USD weakness played positively for the Kiwi buyers.
• August month trade numbers and RBNZ meeting in the spotlight for now.

Following its pullback from multi-year low, NZD/USD stops further advances while waiting for key catalysts. The Kiwi pair confronts the 10-day exponential moving average (EMA) as it takes rounds to 0.6325 at the start of Wednesday’s Asian session.

The NZD/USD pair carried its recovery forward on Tuesday as initial trade optimism backed by the US diplomats comments got additional support from the US Dollar (USD) weakness. However, the quote refrains from extra run-up by the press time as traders await August month trade numbers and monetary policy meeting by the Reserve Bank of New Zealand (RBNZ).

The greenback mainly lost its allure as the US President Donald Trump’s statement at the United Nations General Assembly (UNGA), complaining about China’s trade behavior, triggered fresh risk-off. The mood was then carried forward on the calls of the inquiry to impeach President Trump.

The US House Speak Nancy Pelosi has formally announced to carry the inquiry into the President Trump’s role in influencing Ukrainian politics based on his call with Ukraine’s President.

New Zealand trade numbers are likely to flash mixed trade deficit outcomes, $-1,464M and $-4.86B versus $-685M and $-5.46B respectively on MoM and YoY basis. However, the RBNZ isn’t expected to alter its monetary policy considering the latest growth figures and an absence of inflation numbers for the third quarter. “We expect the RBNZ to keep the cash rate on hold at 1.0% but for the Bank to highlight downside risks locally and offshore. However there is little reason for the RBNZ to cut tomorrow following the surprise 50bps August cut that exceeded the Bank’s own MPS forecast and the NZD more than 3% below its Aug MPS projections,” says TD Securities.

Technical Analysis

While a sustained break of 10-day EMA level near 0.6330 could trigger fresh upside to 0.6360 and 0.6400, buyers are less likely to be pleased unless witnessing a quote beyond 0.6450. On the downside, 0.6270, the recent low of 0.6254 and a multi-month old falling trend-line near 0.6225 can entertain sellers.