The long downward trend continues. The deals to SELL seem the most effective in the middle-term perspective.
The rates continue within the downtrend which has lasted for more than a year, but since 2018 has become more rapid. As a result, the rates have already fallen to the minimums of 2015-2016 and there are all chances for continuation.
Last week the dollar continued to strengthen against most currencies. The most significant stimulus was the report on US GDP for the third quarter, which showed a GDP growth by 3.5% against the expected 3.4%. The USD index reached its highest level for the last 9 weeks. In addition, the manufacturing PMI index from IHS Markit rose to 55.9 pips, which is the highest figure for the last 5 months, exceeding the expected level on the market. Thus, economic growth in the United States continues, which is not the case about many other countries, especially New Zealand.
The latest data about the New Zealand economy show that the economic downturn continues. The latest data on the trade balance showed a record negative trade balance in September at the level of -1559.87 million NZD, which is 25% more compared to the same period last year. At the same time, the export of dairy products, which is one of the main components in the country's exports, decreased by 4.1%. However, the main reason for the growth of the negative balance is the record growth of imports by 18%, while exports grew by only 14.1%, which in the long term allows us to expect new anti-records in the trade balance of New Zealand.
On Friday the USD slightly retreated from its positions due to the decrease in the US stock market and the growing displeasure of Donald Trump with the Fed's aggressive monetary policy. However, the factors that negatively affect the value of the dollar are interim and the strengthening of the dollar will continue, at least against a weak NZD. The most optimal deals in the medium term can still be considered to be the deals in favor of the USD. In the short term it is also possible to open the deals against the trend, taking into account the incompleteness of the price correction and the lack of macroeconomic statistics that could support the USD after the decline on Friday. The situation will change on October 31, when the reports about the US employment market will be published, as well as the index of business activity in the manufacturing sector for October from the ISM.
