• July’s trade data from New Zealand comes in above estimations
  • US AAA rating from Fitch could be at stake if debt ceiling not raised
  • NZDUSD hangs around a crucial technical level

There was quite a benign session across Asia on Thursday with just negligible swings in the FX space. Stock markets have sat on the fence as well as just the Hang Seng (HKComp on xStation5) has managed to make a decent gain adding roughly 1%. In terms of currencies, those have moved barely changed with swings ranging from -0.1% to +0.1%.

As far as the economic data is concerned, there was a noteworthy release from New Zealand. Keep in mind that the New Zealand’s economy strongly relies on trade which accounts for a significant part of GDP growth, hence trade data is especially worth looking at. Trade balance came in at 85m (a surplus) in July against a forecast at -200m (a deficit).

link do file download linkNew Zealand managed to make another surplus in a row even as seasonal patterns suggested a probable deficit. Source: Bloomberg

Moreover, it’s worth adding that exports lowered to 4.63bn from 4.7bn while an estimate pointed to 4.42bn, whereas imports grew from 4.46bn to 4.55bn falling short of a consensus set at 4.6bn. According to the NZ Statistics Bureau, a recovery in dairy export prices buttressed July exports. Let’s add that seasonal patterns suggested a drop in trade balance as it was in the prior years. That said, even though the trade data turned out to be firmer, it could provide just short-lived aid for the NZD.

Furthermore, as we’re nearing the deadline when it comes to a need to raise a debt limit in the US in order to avoid a technical default, the Fitch agency warned the world’s biggest economy that its AAA rating could be at risk if a debt ceiling is not raised. Nevertheless, the agency soothed its tone indicating that a government shutdown would not have a direct impact on the triple A rating.

link do file download linkThe NZDUSD is hovering around an important support zone which, if it’s broken, could speed up a downward move. Source: xStation5

Technically, the pair has already approached a critical support zone which has served as an important level thus far. Even as the trade data could have been a bit reassuring, there is no doubt that bearish momentum is strong, thus a breakout of 0.7190 could provide further space for declines towards 0.71 or even much lower.