Taking a Fundamental Approach to Forex Trading

Trading the Kiwi with the New Zealand Trade Balance

New Zealand trade balance is an important economic indictor released monthly in Wellington by Statistics New Zealand. Calculated in millions of New Zealand dollars, this piece of data illustrates the difference between the net value of exports and the net value of imports in New Zealand for a given month. When the value of exports exceeds the value of imports, a trade surplus is created; and when the value of imports exceeds the value of exports, a trade deficit is created.

New Zealand Main Exports Commodities	New Zealand Main Exports Partners
Dairy products	Australia 20.5%
Meat	US 13.1%
Wood	Japan 10.3%
Fish	China 5.4%
Machinery	UK 4.9%

New Zealand Main Imports Commodities	New Zealand Main Imports Partners
Machinery & equipment	Australia 20.5%
Vehicles	China 12.3%
Petroleum	US 11.8%
Textiles	Japan 9.7%
Plastics	Germany 4.4%

Impact on the New Zealand Dollar
Trade balance forms a considerable part of the New Zealand current account. Consequently, this monthly economic figure plays a significant role in speculating the potential movement of the New Zealand dollar, also known as the Kiwi. Although New Zealand has transformed from an agrarian economy to a more industrialized one, agricultural commodities still represent a huge share in the New Zealand exports. For that, currency traders should follow the climate conditions in New Zealand. Heavy rains, droughts, floods, and other bad weather conditions would harm the agricultural products and decrease value of the New Zealand exports. This would widen the current New Zealand deficit and cause a slide in the Kiwi. On the other hand, good weather conditions would boost the agricultural products and increase the New Zealand exports. The outcome would be a narrowed deficit and an appreciation in the value of the Kiwi.