New Zealand trade balance deteriorates fast

• As per latest data, both export and import deteriorated in New Zealand. Export fell to $ 3.7 billion from previous $ 4.4 billion. Import also fell to $ 3.64 billion from a previous $ 4.6 billion.

• In January the trade balance enjoyed a surplus of $ 0.56 billion but deteriorated sharply on a yearly basis. Chart is attached explaining the data path. All values in chart are in $ billion.

Analogy -

• New Zealand is a stable but export driven economy mainly agricultural and forestry. The slowdown in China & Euro zone is not bearing well for the economy.

• New Zealand even experiencing slower demand at home. House prices fell across the country in recent time as well as headline CPI.

• Reserve Bank of New Zealand (RBNZ) so far kept the interest rate at highest in developed world at 3.5 percent and after disappointing data will be in no hurry to raise the rates. It so far mentioned the rate hike to be the next probable path.

• As the economies across the developed world experiencing ultra-loose monetary policy, RBNZ may soon join in to reduce the pressure of much stronger New Zealand Dollar.

New Zealand dollar is expected to remain under pressure despite recent gains from the comments of Janet Yellen. NZD/USD is currently trading at 0.7588 rejected at resistance of 0.762.