NZD/USD Gets Boost from Better-Than-Expected Trade Balance Data

The AUD/USD rebounded from a three-month low on Tuesday to close higher on Wednesday. The Forex pair finished at .7208, up 0.0025 or +0.35%. Profit-taking and short-covering due to technically oversold conditions were the reasons for the turnaround. On Tuesday, the Aussie broke sharply after Reserve Bank of Australia governor Glenn Stevens hinted that another rate cut to a fresh record low of 1.5 percent could be on the horizon.
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Earlier today, it was reported that Australian construction activity weakened sharply in the first quarter, extending on declines seen in 2015. Official data from the Australian Bureau of Statistics revealed a seasonally adjusted 2.6 percent slump in total construction work done in the three months to March 31.

The NZD/USD closed at .6749, up 0.0013 or +0.19%.  The rally was fueled by technical and fundamental factors. Technically, the Forex pair was oversold according to some indicators. This encouraged investors to buy along with a test of a value zone.

Fundamentally, the New Zealand Dollar gained as a stronger-than-expected trade surplus gave the kiwi an intra-day boost while traders mulled the prospects of a U.S. Federal Reserve interest rate hike as soon as June. New Zealand posted a trade surplus of $292 million in April, more than the $60 million expected in a Reuters poll and up from $184 million a year earlier, as gold kiwifruit and apples drove up exports.

The USD/JPY traded lower in limited price action, finishing at 109.927, down 0.058 or -0.05%.  The Japanese Yen found support from BoJ Kuroda’s speech in parliament today, where he mentioned issues over exiting the BoJ’s easy monetary policy.

Kuroda’s comments came as a surprise to traders, as for the first time ever he spoke on rolling back the ongoing accommodative monetary policy regime.  Weakness in the Japanese equity market also weighed down on the USD/JPY, with the Nikkei 225 index now up +1.61% versus +1.85 seen earlier.

Asian stock markets posted gains on Wednesday in reaction to the huge U.S. rally. Japan’s Nikkei 225 closed up 258.59 points, or 1.57 percent, at 16,757.25 yen. In Australia, the benchmark, S&P/ASX 200 closed up 76.92 points, or 1.45 percent, at $5372.50, led by gains in the heavily-weighted financials sub-index, as well as the energy and materials sub-indexes.

The EUR/JPY finished at 122.589, up 0.066 or +0.05%. A portion of the move was related to technical factors as speculators bought when the Forex pair approached a pair of bottoms at 121.474 and 121.7090.