• NZD/USD rallies as Kiwi gains support from promising trade data, PBoC decision to keep rates unchanged
• US Dollar continues sell-off to new lows as US central bankers hint at interest rate cuts in September. 
• New Zealand trade deficit narrows in July compared to 2023 as exports rise. 

NZD/USD is trading over half a percent higher on Tuesday, exchanging hands in the 0.6140s as the US Dollar (USD) continues sinking. The New Zealand Dollar maintains its strength on the back of news that demand for New Zealand exports narrowed the trade deficit in July compared to a year ago. 

The New Zealand trade deficit came out at NZ$0.963 billion in July 2024, narrowing from NZ$1.174 billion in the corresponding month of the previous year. The result, however, fell below forecasts of a NZ$331 million surplus. Given the cyclical nature of trade data and concerns sparked by the economic slow down in China which is a major export partner, the data was interpreted as overall positive. 

The US Dollar, meanwhile, fell to an eight-month low of 101.80 according to the US Dollar Index (DXY) which measures the USD against a trade-weighted basket of counterparts. The Dollar’s weakness was put down to commentary from US central bankers confirming their willingness to lower interest rates in September. Lower interest rates are negative for a currency as they reduce foreign capital inflows.