The Takeaway:New Zealand Terms of Trade Index (Q4) > -1.3% versus 1.4% expected, -3.2% last quarter > Drops for the sixth consecutive quarter > NZDUSD Bearish
The New Zealand merchandise terms of trade fell unexpectedly 1.3 percent as export prices fell further than import prices in the December 2012 quarter. This decrease means that in the fourth quarter, 1.3 percent less merchandise imports could be funded by a fixed quantity of merchandise exports than in the September quarter. This is the sixth consecutive quarterly fall for New Zealand terms of trade.
Export prices fell 1.9 percent, following a 6.3 percent fall in the third quarter and a 1.0 percent fall in the second quarter. Dairy prices made the largest downward contribution to the change in exports. Dairy prices have fallen for six consecutive quarters. Import prices fell 0.6 percent in the fourth quarter, following a 3.2 percent fall in the September 2012 quarter and a 1.6 percent rise in the June 2012 quarter. The most significant downward contributor to import prices came from mechanical machinery prices, which dropped 2.6 percent.
The following movements occurred in the December 2012 quarter, compared with the September 2012 quarter.
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NZD/USD 1-Minute Chart: February 28, 2013
Chart from FXCM Trading Station, created by Courtney Edwards
The NZDUSD actually rose slightly right after the release came out, but then began to drop back off a few minutes after. The pair was trading at 0.8246 at the time of the release. Earlier today, the kiwi stabilized against major currencies overnight after taking a hit earlier in the week from the Italian election results. The NZD climbed against the USD after data showed a boost in business confidence in New Zealand. The NZDUSD hit 0.8324 during late Asian trading, a high since February 26. The pair consolidated at 0.8316, advancing 0.47%.
--- Written by Courtney Edwards, DailyFX Research
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