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New Zealand’s return to trade deficit dragged Kiwi lower across the board. Meanwhile, other currencies traded on tight ranges ahead of Powell’s testimony.

  • BOJ’s core CPI (y/y) jumps to 0.8% against the expected 0.6% growth, 0.7% uptick in December
  • New Zealand returns to trade deficit in January
  • All eyes on Powell’s testimony

Major Events/Reports:

New Zealand’s trade balance

Data printed just before the end of the U.S. trading session saw New Zealand returning to trade deficit after both import and exports hit new highs.

New Zealand clocked in a trade deficit of 566M NZD in January, which marks the steepest deficit for a January month since 2007. For reference, last month’s surplus (596M NZD) represents the largest-on-record surplus for a December month.

Details reveal that increases in milk powder, butter, and cheese shipments had pushed exports by an annualized rate of 9.5% after rising by 24.3% in December.

In contrast, imports shot up by a whopping 17.1% (against December’s 10.8%) thanks to increases in commodities including turbo-jets, diesel, and ships.

Mixed risk sentiment

Risk appetite from the previous session kept the Asian bourses and a couple of high-yielding currencies afloat during the session.

The moves remained muted, however, thanks to some traders staying in the sidelines ahead of Jerome Powell’s first testimony as the Fed head honcho. Specifically, market players are waiting to see just how hawkish (or non-committal) Yellens’ successor is and how his first speech will affect the dollar’s intraweek trends.

  • Nikkei still rose by 1.29% to 22,440.0;
  • Australia’s A SX 200 inched 0.05% higher to 6,068.5;
  • Hang Seng gained 0.14% to 31,544.2, but the
  • Shanghai index lost 0.91% to 3,299.235.

Even commodity prices took a breather from their recent gains:

  • Gold is down by 0.02% to $1,332.79;
  • Brent crude oil is down by 0.16% to $67.40, and
  • U.S. WTI is down by 0.28% to $63.79.

Major Market Mover(s):

Kiwi bulls didn’t seem to appreciate the details of the trade balance report and chose to trade a weaker headline trade balance reading instead.

NZD/USD is down by 22 pips (-0.30%) to .7280;
NZD/JPY is down by 19 pips (-0.25%) to 77.86;
EUR/NZD is up by 64 pips (+0.38%) to 1.6928;
GBP/NZD is up by 51 pips (+0.27%) to 1.9171, and
AUD/NZD is up by 26 pips (+0.24%) to 1.0776.

Whether it’s Asian session traders taking out their higher-yielding bets ahead of Powell’s testimony or death by association to the Kiwi, the Australian dollar also took some hits across the board.

AUD/USD is down by 7 pips (-0.09%) to 0.7845;
AUD/CHF is down by 8 pips (-0.11%) to .7357;
EUR/AUD is up by 33 pips (+0.21%) to 1.5709, and
GBP/AUD is up by 18 pip s(+0.10%) to 1.7792.

Watch Out For:

  • Germany’s preliminary CPI (0.5% expected, -0.7% previous)
  • 8:00 am GMT: Spain’s flash CPI (y/y) (0.9% expected, 0.6% previous)
  • 9:00 am GMT: Euro Zone’s private loans (y/y) (2.9% expected, 2.8% previous)
  • 10:00 am GMT: German Bundesbank President Weidmann to give a speech in Frankfurt