The kiwi pair is showing mid-trend on today early morning after publication of the New Zealand economic data. The pair has rose to the highest level since August 4 this year, in doing so, the kiwi pair pays a little heed to the domestic data and broad US dollar weakness as the COVID-19 fears renew. The country’s export prices rose again in the second quarter, from -0.8% to 8.3%. This is a stronger performance than the average estimate of 3.0%. At the same time, exports declined by 2.9% to 2.9% in the previous quarter. The same trend happened on the import side. The country’s import prices returned 4.8% as prices of most commodities rose worldwide. As a result, total trading terms rose from 0.1% to 3.3%, well above the average estimate of 2.5%. These numbers show that New Zealand’s economy did relatively well. Besides, data published in July showed that the country’s unemployment rate declined substantially during the quarter.

It is against this backdrop that the Reserve Bank of New Zealand (RBNZ) turned substantially hawkish. It ended its massive bond-buying program and hinted at higher interest rates. However, recently, the country’s outlook has changed as the number of Covid-19 cases has surged. The country has continued to report a gradual increase of cases even as the government implements its lockdown. Therefore, there is a possibility that the RBNZ will maintain a wait-and-see attitude in the next few weeks.

After overcoming a previous drop in corona virus numbers, market players fear another blockbuster number to push the national number to over 700. However, New Zealand Prime Minister Jacinda Ardern is playing down the fear that New Zealand may not be able to follow New South Wales and Victoria as per the NZ Herald, remove Covid-19. In the same vein, the World Health Organization (WHO) is monitoring another strain of the virus, namely Mu, which is vaccine resistant and presents serious challenges.

New Zealand’s Terms of Trade Index for the second quarter (Q2) jumps to a fresh high since the quarter ended on May 2017 while rising 3.3% versus 2.5% expected and 0.1% prior.  It is noteworthy that the downturn signals of the US Employment Report stimulated NZD / USD prices by controlling Fed tapping chats the previous day. On Wednesday, the US dollar dropped after the ADP National Employment Report showed private payrolls rose by 374,000 in August, up from 326,000 in July but well short of the 613,000 forecasts.  The next major move for the NZD / USD will be the latest employment numbers from the US. On Thursday, data shows that the private sector added 374k jobs last month. The figures increase the odds of the Reserve Bank of New Zealand’s (RBNZ) rate hike in 2021 and should have favored the NZD/USD prices to extend the previous four-day rise. However, the virus-led challenges at home probe the bulls. Numbers of official U.S. non-farm payrolls will be released Friday. 

NZD/USD 4 Hour Chart:

Support: 0.7043 (S1), 0.7017 (S2), 0.7000 (S3).

Resistance: 0.7086 (R1), 0.7103 (R2), 0.7129 (R3).

Amidst this above catalysts New-Zealand showing strong economic data but virus woes worries the bullish moment. We expect a mid-trend for NZD/USD.