Forex News: NZ Dollar Rises On Narrower-than-expected Trade Deficit

NZ Dollar Rises On Narrower-than-expected Trade Deficit

(RTTNews) - The New Zealand dollar strengthened against other major currencies in the European session on Friday, due to a smaller-than-expected New Zealand trade deficit.

The ongoing turmoil in the Middle East will be closely monitored by traders as it may have an effect on the currency.

Data from Statistics New Zealand showed that New Zealand had a monthly trade deficit of NZ$257 million in February, compared to NZ$627 million in January. This amount was less than the NZ$470 million shortfall that the market had anticipated.

Traders also expect a possibility of a Reserve Bank of New Zealand or RBNZ raise in May, with additional actions priced for September and December.

This change reflects concerns that inflation will be significantly higher than the RBNZ's 1-3% target range for the majority of the year due to the recent spike in energy costs.

In the European trading today, the NZ dollar rose to a 4-day high of 1.2034 against the Australian dollar, from an early low of 1.2068. The kiwi may test resistance around the 1.19 region.

Against the yen and the euro, the kiwi advanced to 3-day highs of 93.30 and 1.9640 from early lows of 92.66 and 1.9732, respectively. The kiwi may test support near 94.00 against the yen and 1.95 against the euro.

The kiwi edged up to 0.5892 against the U.S. dollar, from an early low of 0.5867. If the kiwi extends its downtrend, it is likely to find support around the 0.60 against the greenback.

Looking ahead, Canada new housing price index for February, retail sales for January, PPI and raw material prices for February and U.S. Baker Hughes oil rig count data are slated for release in the New York session.

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