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Last night’s stronger than expected New Zealand trade balance reinforces our view that New Zealand’s economy is on upside. The country’s trade surplus reached its greatest level since March 2015 as exports hit a 2 year high. Dairy exports in particular rose 35% but gains were also seen in demand for log and wine. These improvements should ease the central bank’s concerns and pave the way for the currency’s outperformance. We like buying New Zealand dollars against the Swiss Franc because European currencies have peaked and NZD/CHF is a lower vol EUR/NZD trade.
Technically, the pair has broken above the 20-day SMA and appears poised to test/break 69 cents. There’s significant support below 67 cents but the 100-week SMA near 0.6782 should also limit losses.