The Australian Dollar (AUD) weaken against the New Zealand Dollar (NZD) after stats concerning trade balance were released on Monday. It simply outclassed with prominent margin what economists had anticipated. The data tells that the trade balance improved during the last quarter and stayed around 5745 M, as it was 4820, the quarter before.
The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.
The economists also indicated an uprise in the said data by giving a value of 4820 M. It is to be noted that the trade balance represents the difference between import and export levels of the country. Both imports and exports levels stayed in coherence followed by a reasonable domestic demand in terms of imports and an unchanged or improved demand in exchange for exports of the country. So, the pair is believed to start moving positively.
The pair continues sinking since last week, which can be seen in the graph below. It is quite likely that the pair will keep sliding downward until or unless it gets a strong reversal.
Trading AUDNZD may be a better idea for a short term position. However, it may get a reversal around 1.0510 and start declining again. If this happens, trading the pair for a long term position may be avoided.