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NZD/USD: short positions in relevant

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Today at 22:45 (GMT) will be published data on the trade balance in New Zealand in April. According to the presented data last month, foreign trade deficit of the country for the year amounted to 3.838 million New Zealand dollars, which was the largest deficit since April 2009. This positive balance of foreign trade of New Zealand in March decreased and amounted to 117 million New Zealand dollars (against the forecast of 405 million and 367 million in February).

Now it is expected that the surplus in April fell further, reaching 60 million New Zealand dollars.

Also negatively on the economy and the filling of its budget impact reduction in the volume of Chinese imports from New Zealand, as well as the decline in international commodity prices, especially for dairy products.

Later in the week will be held the presentation of the first forecasts regarding company Fonterra dairy prices next season. And any negative forecasts will put pressure on the New Zealand currency.

Once in March, the central bank of New Zealand unexpectedly lowered its key interest rate market, the New Zealand dollar fell sharply on the currency market.
In the following comments from the RBNZ said that the central bank fears a further deterioration of the global economic outlook and the decline in inflation expectations in most of New Zealand.

RBNZ intends to continue to adhere to a soft monetary policy. At a meeting in late April, the RBNZ left its key interest rate unchanged at 2.25%. However, the RBNZ can go for further reduction in interest rates at the meeting on June 8. Currently, the annual inflation rate in the country is 0.4%, well below the target range of 1% -3%.
Many New Zealand macroeconomic indicators speak in favor of further easing of monetary policy in the country.

And, given the different directions of the Fed and RBNZ monetary policy, we can conclude a further decrease in the pair NZD / USD, at least until the Fed meeting on June 14-15.

Tuesday, 24 May, 2016 / 10:24

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