NZD/USD with a decline, ignoring positive NZ trade balance data

New Zealand dollar edged lower against the greenback on trading Wednesday, despite the release of optimistic trade balance data from New Zealand, as soft Chinese PMI caused greater influence on the kiwi.

NZD/USD slid to a session low at 0.7950 at 1:50 GMT, after which consolidation followed at 0.7979. Support for the pair was expected at July 22nd low, 0.7909, while resistance was to be encountered at June 19th high, 0.8054.

A report said earlier on Wednesday that the trade balance of New Zealand recorded a larger surplus than projected in June, amounting to 0.414 billion NZD, compared to the expected 0.105 billion NZD. Surplus during May was revised down to 0.039 billion NZD from 0.071 billion NZD previously.

Additionally, Reserve Bank of New Zealand Governor Graeme Wheeler, who is expected to announce a policy decision on Thursday, will maintain borrowing costs at 2.50%, a survey of economists showed, according to Bloomberg.

“I’m fairly bullish on the New Zealand economy,” Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and interest-rate risk-management company, said before the reports on China’s manufacturing PMI and Australian inflation, cited by Bloomberg. “If the kiwi can close the week above 80 cents, there may be some more room for the currency to advance”, he also added.

On the other hand, today HSBC Holdings Plc and Markit Economics reported that the preliminary value of the Purchasing Managers’ Index in Chinese sector of manufacturing decreased at a faster than expected rate to 47.7 during July, after showing a value of 48.2 a month ago, marking its lowest reading in 11 months. Values below 50.0 are a sign that activity in the sector has shrunk. This news had and impact on the kiwi dollar, as China is New Zealands second largest export partner.

In the mean time, the US dollar received some support after recent weaker US housing data cooled expectations of the Federal Reserve Bank paring back its asset purchases later in the year.

Elsewhere, the kiwi dollar was trading higher against its Australian peer, as AUD/NZD cross erased 0.17% to 1.1609 at 7:27 GMT.

Later in the trading day, the United States was expected to release data, regarding new home sales, which is a crucial indicator of the housing market situation in the country, as better than projected results may increase the demand for the greenback.