The New Zealand economy had a significant downturn in international trade during December, with goods exports dropping by -8.7% yoy, amounting to a decrease of NZD 568B, resulting in exports totaling NZD 5.9B. Concurrently, goods imports saw a more pronounced fall of -13%yoy, which translates to a reduction of NZD 896m, culminating in imports of NZD 6.3B. This overall downturn in trade activities led to a monthly trade deficit of NZD 323m, which, while substantial, was less severe than the anticipated deficit of NZD 975m.
A notable aspect of this trade activity is the geographical distribution of these declines. Among New Zealand’s key trading partners, China marked the most significant decrease in exports, with a reduction of NZD 295m, indicating a -16% drop. This was followed by declines in exports to EU (-20% drop, NZD 75m), Japan (-17% drop, NZD 54m), US (-4.6% drop, NZD 38m), and Australia (-0.8% drop, NZD 6m).
On the import side, US led the fall with a dramatic -40% reduction, amounting to NZD 390m less in imports. Other significant decreases in imports were observed from China (-12% drop, NZD 185m), the European Union (-14% drop, NZD 152m), and Australia (-9.8% drop, NZD 79m). However, South Korea bucked this trend with a striking 113% increase in imports to New Zealand, totaling an additional NZD 356m.
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Full New Zealand trade balance release here.
US stocks hit new records amid reduced Treasury borrowing forecast
US stock markets rose strongly overnight, with both DOW and S&P 500 reaching new record highs. This coincided with a mild dip in 10-year yield as bonds rebounded. A key factor influencing this movement was Treasury’s announcement of a reduction in its borrowing forecast for Q1. The Treasury indicated plans to borrow USD 760B, which is USD 55B less than its previous estimate in October. This adjustment is attributed to “projections of higher net fiscal flows and a higher beginning of quarter cash balance,” as per the Treasury’s statement.
Technically, strong resistance could still be seen from 100% projection of 28660.94 to 34712.28 from 32327.20 at 38378.54 to bring a near term pull back. Break of 37796.71 support will indicate the start of a correction back to 55 D EMA (now at 36737.49).
Conversely, decisive break of 38378.54 could trigger reacceleration to 138.2% projection at 40690.15, which is slightly above 40k psychological level, before topping.