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NZ Dollar Climbs on Record Trade Surplus, Positive Market Sentiment

May 26, 2020 at 11:06 by Vladimir Vyun

Many 100-dollar billsThe New Zealand dollar climbed against all other most-traded peers today thanks to the relatively positive domestic macroeconomic data and the market sentiment that was supportive of riskier currencies.

Statistic New Zealand reported that the trade balance surplus widened to NZ$1,267 million in April from NZ$722 million in the previous month (revised, NZ$672 million before the revision). It was the largest surplus on record. But the underlying details were not that good as both imports and exports fell, it is just that imports fell much more than exports. Exports fell 4%, year-on-year, whereas imports dropped by 22%.

The market sentiment was positive on Tuesday due to hopes for an end to the coronavirus crisis. Investors were looking for economic recovery after the pandemic subsides, and talks about a possible COVID-19 vaccine were adding to such hopes. Meanwhile, it looked like markets paid less attention to the situation in Hong Kong, though it still can have a negative impact on the traders’ mood in the longer term.

Going forward, the New Zealand currency will likely react to today’s US macroeconomic data, including consumer sentiment. As for economic reports in New Zealand itself over the week, there will be few of them, with the Reserve Bank of New Zealand releasing its semiannual Financial Stability Report tomorrow and the ANZ Business Confidence coming out on Wednesday.

NZD/USD jumped from 0.6100 to 0.6179 as of 11:06 GMT today. EUR/NZD dropped from 1.7842 to 1.7729. NZD/JPY climbed from 65.71 to 66.45.

If you have any questions, comments, or opinions regarding the New Zealand Dollar, feel free to post them using the commentary form below.

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