Aussie and Kiwi Rise Despite Economy Deteriorating

The Aussie and the Kiwi rose on Tuesday despite economy deteriorating. Presently, the U.S. dollar lost 0.7% of its value against the Aussie to trade around 0.9157, while the greenback's fall was a bit more modest against the Kiwi as the U.S. currency retreated 0.64% to stand around 1.1497. The British pound was also among the losers in Tuesday's trading, as the British currency fell 0.18% against the Aussie to 1.4980 and 0.14% against the Kiwi to 1.8808. However, the euro proved too strong for the currencies of Australia and New Zealand as the euro rose 0.12% against the Aussie to 1.3273 and 0.19% against the Kiwi to 1.6671. The Kiwi was hit by deterioration in New Zealand's trade balance. According to

, New Zealand's trade balance surplus fell from a revised NZ$552 million in May to NZ$230 million in June, when most analysts had expected the June value to stand around NZ$400 million. The fall was primarily due to falling exports, which contracted from a revised NZ$4.62 billion in May to NZ$3.97 billion in June, when most analysts expected exports to reach NZ$4.30 billion. At the same time, imports fell at a much slower pace, sliding from NZ$4.02 billion in May to NZ$3.74 billion in June. Analysts were much better in predicting the June's total imports value, since most analysts expected imports to stand around NZ$3.80 billion. The Kiwi has been trading near record heights for some time now. It seems that the strength of New Zealand's currency is starting to take its toll on the country's exporters. New Zealand is an exports-driven economy, with powerful exporters in the commodities sector, so the latest data might put more pressure on the country's central bank to intervene in order to prevent the Kiwi from rising to new highs. The Australian economy failed to impress as well as

fell 0.1% in May, compared to a month earlier, from a 0.2% rise in April. The index measures the health of Australia's economy by combining eight other indexes. Australia has been recovering from the effects of the Queensland floods and it seems that the recovery is losing steam. Both the Aussie and the Kiwi have risen to new heights against other major currencies since the start of the financial crisis, since economies of Australia and New Zealand have performed relatively well during the crisis, especially compared to Western Europe and North America. In fact, Australia was the only developed nation to avoid recession. However, Tuesday's gains might be better interpreted as the weakness of the greenback and the pound and not as the strength of the Aussie and Kiwi. In the United States, the two parties are seemingly more engaged in the blame game than in negotiating the debt ceiling deal. After another day has passed without the deal being struck,

has once more accused Republicans, who control the House of Representatives, of pushing spending cuts only approach, which would disproportionately hurt the middle and working class. On the other hand, Obama and his Democrats, who control the Senate, are arguing for a more balanced approach of spending cuts and tax hikes for the wealthy. The deal seems to be miles away at this point, while the U.S. economy is running out of time. A default, which the U.S. will be forced to declare in early August if the debt ceiling is not raised, will most likely crush the country's ailing recovery, possibly pushing the world's economic superpower back into recession. The rest of the world might follow this path shortly afterwards. Things are not looking great in Great Britain as well, since the country has been facing its share of debt problems. However, the UK's governing coalition has already embarked on a radical spending cuts and tax hikes plan to reduce the country's massive debt. The problem is the cuts might be too deep and are starting to hurt the country's faltering recovery.

reports that UK's GDP growth will most likely slow down in the June quarter, possibly even hitting a negative value. The UK GDP growth rate data for the June quarter is expected later on Tuesday. The Aussie and the Kiwi might have found some support in rising commodity prices, since both countries are major exporters of commodities. Gold is setting new records, rising 0.02% to $1,616.15. Silver is trading above the $40 barrier once more, rising 0.22% to $40.44. At the same time, crude oil is approaching the $100 mark, rising 0.41% to $99.58. The biggest winner in Tuesday's trading was copper, since its price increased 1.08% to $4.456. Natural gas was the only major commodity with declining price. Presently, natural gas is trading 0.53% below yesterday's close at $4.327.

Traders who believe that the economic performance of Australia and New Zealand will continue to be admirable compared to Europe and North America, which should provide some tailwind for the Kiwi and the Aussie, might want to consider the following trades: