By Vincent Mivelaz
New Zealand's economy is showing signs of recovery following recent February trade balance data given at NZD 217million (consensus: -100 million) or USD 157 million, the highest rate after NZD -655 million deficit in January. On the downside however, New Zealand 12 months trade balance remains at NZD -3 billion. Exports rose by NZD 4.46 billion (previous: NZD 4.31 billion) while imports increased by NZD 4.24 billion (previous: NZD 4.94 billion).
Royal Bank of New Zealand agreed to implement a second mandate alongside price stability on Monday, consisting of maximum employment, in line with Fed’s existing dual mandate implemented in the 1970s. The mandate will be enshrined in law this year. New Zealand treasuries remain unchanged following the announcement. 2-year and 10-year yields are given at 1.88% (+0.17) and 2.78% (+0.18).
On the forex side, we notice the strong increase of non-commercial long NZD futures positions increasing by 19’626 (previous week: -2’816), amounting to 44% of total open interest contracts, thus signalling traders’ tendency to dump the greenback. The trend might continue into that direction, supposing further weakness from the USD.
Accordingly, we suspect the USD/NZD to head along the 1.37 range.
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