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The forex trading week has come and gone, so it’s time to take a look at how the major currencies performed and what drove price action.

Volatility tightened again this past week since only one currency pair among the top 10 movers printed a weekly % change in excess of 1%.

With that said, Greenback weakness was clearly the major theme this week since 6 of the top 10 movers were Greenback pairs, with USD on the losing end in all of them.

So, what drove the Greenback lower this week? And what about the other currencies? What drove their price action this week? Well, time to find out!

But before that, here’s this week’s scoreboard.

And if you only want to find out what happened to a specific currency, then you can just skip to that currency by clicking on it below.

The U.S. Dollar

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

The Greenback was the biggest loser this past week. And as you can clearly see in that overlay of USD pairs, the Greenback had a mixed start before suffering the bulk of its losses when it got the stuffing beaten out of it on Wednesday and then steadying on Thursday and having another mixed performance on Friday.

So, what happened on Wednesday? Well, to be more precise the beat-down actually began during Tuesday’s late U.S. session, thanks to Fed Head Yellen’s comment that she is very uncertain” about a rebound in inflation happening anytime soon, stressing the possibility that price levels could remain low for years to come.

And Yellen’s comment apparently caused U.S. bond yields to start sliding since Yellen’s comment is partly the reason why odds for a follow-up March 2018 rate hike fell from 53.35% on Monday to 50.80% on Tuesday, according to the CME Group’s Fedwatch tool.

A second wave of sellers whupped the Greenback after U.S. durable goods orders unexpectedly plunged by 1.2% in October after two consecutive months of gains. The decline was due to the fall in transportation goods, though. If transportation goods are excluded to get at the core reading, then core reading came in at +0.4%, which is within expectations. However, that’s still a drastic slowdown from the previous month’s 1.1% increase.

Moving on, the final wave of sellers slammed into the Greenback when the minutes of the latest FOMC meeting were released.

You see, doubts on future rate hike apparently began to grow because the minutes revealed that Fed officials were worried about inflation and inflation expectations.

To quote directly from the minutes:

With core inflation readings continuing to surprise on the downside, however, many participants observed that there was some likelihood that inflation might remain below 2 percent for longer than they currently expected.

[S]everal participants expressed concern that the persistently weak inflation data could lead to a decline in longer-term inflation expectations or may have done so already.

“[T]he possibility was raised that monetary policy actions or communications over the past couple of years, while inflation was below the Committee’s 2 percent objective, may have contributed to a decline in longer-run inflation expectations below a level consistent with that objective.

Many participants observed, however, that continued low readings on inflation, which had occurred even as the labor market tightened, might reflect not only transitory factors, but also the influence of developments that could prove more persistent.”

“A number of these participants were worried that a decline in longer-term inflation expectations would make it more challenging for the Committee to promote a return of inflation to 2 percent over the medium term.

However, the minutes did affirm that a December rate hike is likely coming because the minutes revealed that:

“[M]any participants thought that another increase in the target range for the federal funds rate was likely to be warranted in the near term if incoming information left the medium-term outlook broadly unchanged.

And that’s likely the reason why follow-through selling on the Greenback in the wake of the FOMC minutes didn’t really materialize and the Greenback’s price action became more mixed after Wednesday’s dump.

The Euro

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart

The euro outpaced all its forex rivals to come out on top this week. The euro had a troubled start, however, thanks to news over the weekend that negotiations to form a coalition government in Germany failed to pan out.

The euro later jumped higher during the late Asian session and at the start of the London session, even though there were no apparent catalysts. And market analysts only stated the obvious when they noted that traders apparently brushed off the negative German news.

After that rather volatile two-way action, the euro’s price action became more mixed, so opposing currencies apparently began dictating price action on euro pairs. This mixed and messy price action on the euro continued until Wednesday.

And when Thursday’s Asian session finally rolled around, the euro began to find buyers on most pairs, with the exception of EUR/NZD. But even EUR/NZD began to trend higher by the time the London session rolled around.

As to what drove higher on Thursday, market analysts directly attributed that to the net positive Euro Zone PMI reports. But as you probably saw in the overlay of EUR pairs, the euro did jump higher and continued to trend higher after the PMI reports were released. However, the euro was already making its way higher before the PMI reports came out.

As such, it’s much more likely that the euro’s rise was due to forex traders opening preemptive bets ahead of the PMI reports.

As for some details, Markit’s latest batch of PMI reports for the Euro Zone as a whole showed that instead of easing to 58.2 as expected, the Euro Zone’s flash manufacturing PMI jumped from 58.5 to 60.0, which is an amazing 211-month high! The Euro Zone’s flash services PMI also improved from 55.0 to a six-month high of 56.2, which is a better improvement compared to the forecast that it would only rise slightly to 55.2.

In addition, commentary from Markit noted that “multi-year highs [were] seen for all main indicators of output, demand, employment and inflation in November.” Moreover, Markit noted that “Business activity and prices rose at the steepest rates for over six years,” which are very promising signs for both continued growth and stronger inflation in the Euro Zone.

Moving on, the minutes of the most recent ECB meeting were released a few hours after the PMI reports were released. And the minutes apparently blunted the euro’s rally and even caused the euro to dip on some pairs.

Interestingly enough, the minutes didn’t really reveal anything that’s surprisingly new since the minutes merely repeated the ECB’s cautious outlook on inflation, which is why the ECB did not put an end date to its QE program.

However, the ECB minutes also reiterated the ECB’s rather positive outlook on growth when the minutes noted that “Incoming information pointed to continued solid economic expansion in the second half of 2017.

In addition, the minutes did imply that the ECB didn’t want to set an end date for its QE program because the ECB did not want financial conditions to tighten:

Therefore, retaining the open-endedness of the APP underscored the Governing Council’s steadfast commitment to preserve the degree of accommodation needed for inflation to return towards levels that were below, but close to, 2% … In addition, the announcement of an end date could induce market participants to frontload possible price adjustments, which might lead to an undue tightening in financial conditions

As such, dip buyers on the euro were noticeable across the board. The euro then got a bullish boost a couple of hours before IFO’s German business climate index was released. And that was likely due to preemptive positioning since the euro began to find sellers after the report was released, even though the reading soared from 116.8 to a record high of 117.5 instead of sliding lower to 116.6 as expected.

No worries, though, euro bulls pounced when the U.S. session rolled around, causing the euro to spurt higher across the board and close out the week on a strong footing.

The actual catalyst is not clear. However, the euro’s surge was likely fueled by easing concerns with regard to German politics since Social Democratic Party of Germany (SPD) leader Martin Schulz said at the time that:

“We [the SPD] won’t be obstructionist for the sake of being obstructionist.”

This apparently goes against the SPD’s earlier stance that it won’t play along with Merkel and likely renewed hopes that a coalition government would be formed in Germany.

However, Schulz did stress that there’s “no automatic path” to a coalition, adding that SPD members would have to vote on any decisions. Even so, Schulz did say that if a coalition fails to pan out, the SPD will likely cooperate with a Merkel-led minority government.

The Pound Sterling

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart

The pound edged out the Aussie and the Swissy and to come out as the third best-performing currency of the week.

The pound started the trading week on a good footing. There were no apparent catalysts, but market analysts pointed mainly to easing worries related to Brexit talks because of news over the weekend.

However, the pound was rushed by sellers later during the London session, apparently because renewed Brexit-related jitters after Michel Barnier, the E.U.’s top Brexit negotiator, said some not-so-nice things.

For one, Barnier implied that E.U. member states may block a trade deal if the U.K. veers away from “the European model” when he said the following:

“The UK has chosen to leave the EU. Does it want to stay close to the European model or does it want to gradually move away from it? The UK’s reply to this question will be important and even decisive because it will shape the discussion on our future partnership and shape also the conditions for ratification of that partnership in many national parliaments and obviously in the European Parliament. I do not say this to create problems but to avoid problems.”

Another is that Barnier explicitly warned that U.K. banks will lose access to the E.U. single market when he said the following:

“The legal consequence of Brexit is that UK financial service providers lose their EU passport. This passport allows them to offer their services to a market of 500 million consumers and 22 million businesses.”

Despite the rush of pound sellers in the wake of Barnier’s comments, buying pressure on the pound was noticeable. And so the pound steadily moved higher against most of its peers.

The pound would later tank on Tuesday, even though there were no apparent catalysts. Profit-taking by pound bulls is a possibility, though, since the pound began sliding about two hours before four BOE MPC members testified in front of the Treasury Select Committee.

As for specifics, Jon Cunliffe explained that he voted against the BOE’s recent decision to hike the Bank Rate because of persistently weak domestic inflation in the U.K. and poor wage growth despite the weaker pound.

As such, Cunliffe concluded that:

“These make it possible to wait before tightening policy until there is clear evidence that pay growth is responding to the level of unemployment in line with our forecast.”

Gertjan Vlieghe, meanwhile, explained that he voted for a rate hike because:

“If you wait until all the signs are lined up to support the decision then you will almost always be too late.”

For his part, Michael Saunders it would only be a matter of time before the tighter labor market would result in higher inflation, which is why he voted for a rate hike.

Saunders did sound a bit more neutral on forward guidance, though, since he said stressed that monetary policy will depend on how the U.K. economy evolves.

As for Ian McCafferty, he basically agreed with Saunders, he agreed with Saunders’ outlook on inflation, which is why he also voted for a hike. Like Saunders, however, he also said that monetary policy would being depend on how the U.K. economy fared going forward.

Overall, nothing really new or explicitly dovish, which is likely why the pound tried to resume its rally. However, selling interest remained and the so pound became mixed after that before getting kicked lower across the board on Wednesday when U.K. Chancellor of the Exchequer Philip Hammond revealed the Autumn 2017 Budget before Parliament since that showed that the Office of Budget Responsibility (OBR) drastically downgraded its U.K. growth forecasts largely because of an expected slowdown in business investment and productivity growth:

  • 2017 GDP: revised lower to +1.5% (+2.0% originally)
  • 2018 GDP: revised lower to +1.4% (+1.6% originally)
  • 2019 GDP: revised lower to +1.3% (+1.7% originally)
  • 2020 GDP: revised lower to +1.3% (+1.9% originally)
  • 2021 GDP: revised lower to +1.5% (+2.0% originally)
  • 2022 GDP: 1.6% (new forecast)

The pound would snap back higher later, though, supposedly because the sharp downgrades were expected, market analysts claimed.

After that, price action on the pound became a mess again before showing broad-based weakness when Thursday’s Asian session rolled around.

There was no clear reason for the dip, but market analysts said that traders were shifting their focus to British PM Theresa May’s Friday meeting in Brussels with E.U. Council President Donald Tusk, so it’s possible that renewed Brexit worries weighed on the pound.

The pound would later climb higher across the board on Friday, though, apparently as a reaction to European Commission President Jean-Claude Juncker’s statement that “making progress” in Brexit talks is better compared to being in a state of “chaos”.  And when he was asked if he thinks sufficient progress has been made, Juncker replied with a “yes“.

However, Juncker wouldn’t be Juncker if he didn’t take a stab at Brexit, so Juncker also took the opportunity to say that “Brexit is a tragedy.”

Anti-Brexit rhetoric from Juncker is par for the course, though, so pound traders were more focused on the nice things Juncker had to say, market analysts say. And that sent the pound higher.

Incidentally (well, not really), the bullish infusion on Friday is the reason why the pound was able to edge out the Aussie and the Swissy since the pound was on the losing end before that.

The pound even initially had the upper hand against the Kiwi because of Friday’s bullish burst. However, the pound found late sellers on Friday, apparently as a reaction to E.U. Council President Donald Tusk’s tweet after meeting with British PM Theresa May.

Traders apparently didn’t like that bit about moving on to post-Brexit trade talks as being a “huge challenge.”

The Swiss Franc

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart

Risk appetite was the dominant sentiment this week but the safe-haven Swissy was a net winner. The euro was the best-performing currency of the week, though, so does that mean that the euro and Swissy are still dancing in tandem? You bet!

Interestingly enough, the Swissy actually initially outperformed the euro, likely because uncertainty with regard to German government coalition negotiations meant more safe-haven demand for the Swissy and/or dampened demand for the euro.

But as mentioned earlier when we discussed the euro, worries related to German politics eased on Friday, likely because SPD leader Martin Schulz said at the time that:

“We [the SPD] won’t be obstructionist for the sake of being obstructionist.”

That’s the most likely reason for the euro’s bullish push on Friday. But as you can see in the sample pairs below, the Swissy lost its lead to the euro on Friday, since the euro surged higher but the Swissy actually found sellers.

USD/CHF (inverted, red) vs.  EUR/USD (black): 1-Hour Forex Chart
USD/CHF (inverted, red) vs.  EUR/USD (black): 1-Hour Forex Chart
NZD/CHF (inverted, red) vs.  EUR/NZD (black): 1-Hour Forex Chart
NZD/CHF (inverted, red) vs.  EUR/NZD (black): 1-Hour Forex Chart
GBP/CHF (inverted, red) vs.  EUR/GBP (black): 1-Hour Forex Chart
GBP/CHF (inverted, red) vs.  EUR/GBP (black): 1-Hour Forex Chart

The Japanese Yen

Overlay of Inverted JPY Pairs & US10Y Bond Yield (Black Line): 1-Hour Forex Chart
Overlay of Inverted JPY Pairs & US2Y Bond Yield (Black Line): 1-Hour Forex Chart

As usual, yen pairs were taking directional cues from bond yields, so the yen got swamped by sellers on Monday when bond yields rose, due to the prevalence of risk-appetite and expectations that the FOMC minutes will show that a December rate hike is still in the cards, market analysts say.

Bond yields climbed even higher on Tuesday. This time, however, the yen’s price action was a bit more mixed, likely because risk aversion returned briefly, allowing the yen to resist the selling pressure from rising bond yields.

Risk aversion initially persisted on Wednesday but had a strong comeback during the London and U.S. sessions. Instead of denting demand for the safe-haven yen, however, the yen actually gained strength and went on the offensive since bond yields plunged because of a triple whammy from Fed Head Yellen’s comment that she is very uncertain” about a rebound in inflation, strong demand for European bonds from pension funds, as well as falling U.S. bond yields because the FOMC minutes affirmed expectations for a December Fed rate hike while weakening expectations for future rate hikes, market analysts say.

After that, bond yields steadied on Thursday but risk-taking prevailed, which is likely why the yen felt some selling pressure and returned some of its gains on most pairs.

Bond yields climbed higher later on Friday, thanks to another round of risk-taking, so the yen weakened some more to close out the trading week as a net loser.

The Canadian Dollar

Overlay of CAD Pairs & Crude Oil (Black Line): 1-Hour Forex Chart
Overlay of CAD Pairs & Crude Oil (Black Line): 1-Hour Forex Chart

Oil was on a tear this past week, but the Loonie was scraping the bottom of the forex heap. What’s up with that weirdness?

Well, that’s not really new, though. After all I did point out in last week’s CAD recap that oil and the Loonie weren’t seeing eye-to-eye, likely because last week’s surge in oil prices was driven by news that the Keystone pipeline leaked around 5,000 barrels in South Dakota, which forced TransCanada to shut down the pipeline.

And that ain’t good because oil is Canada’s main commodity export, which is why the Loonie’s price action tends to track oil prices in the first place.

Well, problems with the Keystone pipeline were still not resolved when the new trading week started. In fact, TransCanada announced late on Tuesday that oil delivered to the U.S. via the Keystone pipeline is estimated to suffer an 85% reduction until the end of November because of last week’s leaks.

This news was pretty good for oil prices. But again, that ain’t good for the Canadian economy (and the Loonie). And that disappointing news is very likely the reason why the Loonie weakened against everything (except USD) during Tuesday’s late U.S. session and the whole of Wednesday, even though oil prices were climbing higher.

Thursday was another day of suffering and pain for the Loonie, thanks to Canada’s disappointing retail sales report. Although those of you who were able to read up on Forex Gump’s Event Preview for Canada’s retail sales report were probably not too surprised and may have even profited from the event.

As for specifics, the total value of retail sales in Canada only saw a 0.1% increase in September, which is way below the consensus for a 0.9% rebound after last month’s 0.1% contraction.

Also, 6 of the 11 retail  stores reported further declines in sales. It just so happens that the recovery in sales at food and beverage stores (+0.3% vs. -2.5% previous) and building material and garden equipment and supplies dealers (+2.6% vs. -0.7% previous) were able to offset these declines.

Even so, the broad-based declines in sales meant that the core reading only increased by 0.3%, missing expectations that it would print a strong 1.0% recovery.

Moving on, the Loonie’s price action became a bit mixed after that. The Loonie did close Friday on a high note against most of its peers, though, likely because of short-covering by Loonie bears.

It’s possible that the Loonie was boosted by oil prices, but that’s not very likely since the Loonie didn’t really track oil prices that closely. Also, the Keystone pipeline was still out of commission on Friday. Although TransCanada did announce late on Friday that it was able to recover some of the leaked oil. No word yet on when the pipeline will resume operations, though.

The Australian Dollar

Overlay of AUD Pairs & Gold (Black Line): 1-Hour Forex Chart
Overlay of AUD Pairs & Gold (Black Line): 1-Hour Forex Chart

As has been the case in the past few weeks, the Aussie took directional cues from gold and risk sentiment, which makes for some rather weird and messy price action, especially on Monday when gold prices dropped because of the Greenback’s overall strength, which is bearish for the Aussie. But at the same time, risk-taking was the name of the game on Monday, which is bullish for the higher-yielding Aussie.

And these two conflicting directional signals is probably why the Aussie had a rather confusing price action on Monday. Although it’s also possible that Aussie traders were just wary of positioning heavily ahead of the RBA’s meeting minutes.

Speaking of the RBA’s meeting minutes, that caused the Aussie to dip even though risk-taking prevailed and gold prices recovered, likely because the minutes presented a somewhat dovish tone overall.

To be more specific, the RBA remained upbeat about growth and inflation. Inflation, in particular, is expected to pick up “consistent with the expectation that a further tightening in labour market conditions would gradually feed into higher wage pressures.”

And this is where the dovish part of the minutes come in (emphasis mine):

“Members noted, however, that there was considerable uncertainty around when and how quickly wage pressures might emerge and about how much these would add to inflationary pressure. In particular, they noted that, among other factors, pressure on margins from strong competition and a faster-than-expected pick-up in productivity growth could delay the pass-through of tighter labour market conditions to inflationary pressure.”

In short, the RBA is not too confident that wage growth will pick up and how the positive impact of stronger wage growth will be on inflation, which reinforces the idea that the RBA won’t be hiking anytime soon.

Thankfully for RBA bulls, RBA Guv’nah Philip Lowe came to save the day when he gave a speech.

Most of Lowe’s speech was actually just a rehash of what was already discussed in the RBA’s minutes. However, the conclusion of Lowe’s speech was a bit more hawkish (emphasis mine):

“So, in summary, over the past year or so there has been progress in moving the economy closer to full employment and in having inflation return to the 2 to 3 per cent range. Both of these are positive developments and suggest a more familiar normal is still in sight. Progress on these fronts has been made while also containing the build-up of risks in household balance sheets.”

“We still, though, remain short of full employment, and inflation is expected to pick up only gradually and remain below average for some time yet. This means that a continuation of accommodative monetary policy is appropriate. If the economy continues to improve as expected, it is more likely that the next move in interest rates will be up, rather than down. But the continuing spare capacity in the economy and the subdued outlook for inflation mean that there is not a strong case for a near-term adjustment in monetary policy. We will, of course, continue to keep that judgement under review.”

Lowe did emphasize that “there is not a strong case for a near-term adjustment in monetary policy,” (i.e. no rate hike in the near future) but his statement about the “next move” being “up, rather than down” is still hawkish.

However, I just wanna point out that this hawkish monetary policy bias down the road is not really new.

After all, I did point out in the AUD recap from two weeks ago that the RBA noted in the RBA’s Statement on Monetary Policy that “The cash rate is assumed to move broadly in line with market pricing.” And market pricing points to a rate hike by the middle of next year.

As I also pointed out two weeks ago, however, the RBA was quick to say back then that:

“This does not represent a commitment by the Reserve Bank Board to any particular path for policy.”

And that same neutral near-term bias on monetary policy was reiterated in Lowe’s speech, which is likely why the Aussie’s bullish reaction to Lowe’s speech didn’t have a lot of follow-through buying. Although it’s also likely that demand for the Aussie was dampened because gold was wobbling on that day and return of risk aversion returned.

Wednesday was another choppy day for the Aussie since gold climbed higher but risk aversion persisted during Wednesday’s Asian session and during the earlier morning London session. The risk-off vibes apparently had a bigger impact on the Aussie’s price action, though, since the Aussie weakened against all its peers with the exception of the Greenback.

Risk-taking later made a comeback during Wednesday’s late London and U.S. sessions. Sadly for the Aussie, gold was also coming off its highs, and so the Aussie had another bout of choppy price action.

Risk-taking then persisted into Thursday and Friday. Gold was steady but tilting slightly to the downside on Thursday and Friday, though. And it looks like the Aussie just shrugged off the risk-on vibes and took directional cues from gold since the Aussie was also steady from Thursday to Friday to end the week mixed.

The New Zealand Dollar

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Forex Chart

The Kiwi’s price action this week was driven partly by risk sentiment and partly by interest rate differentials, particularly with regard to the U.S. dollar and Fed rate hike expectations versus the Kiwi and the RBNZ’s forward guidance that interest rates aren’t expected to rise until 2019.

There were a few economic reports as well, although only New Zealand’s retail sales report appeared to have an impact on the Kiwi price action.

Anyhow, the Kiwi had a strong start, likely because of the prevalence of risk appetite on Monday.

However, selling pressure began to manifest on Monday even though risk appetite intensified during Monday’s U.S. session, which is kind of weird. And it is at this point that hints began to appear that interest rate differentials were in play since a quick look at the CME Group’s Fedwatch tool shows that while odds for a December 2017 rate hike were at 100%, odds for a follow-up March 2018 rate hike improved from last Friday’s 48.02% to 53.35% on Monday.

There were signs of returning risk aversion on Tuesday and the latest dairy auction even resulted in the GDT price index slumping by 3.5%. Despite all that, the higher-yielding Kiwi just powered through and closed higher against most of its peers.

And a look at the CME Group’s Fedwatch tool shows that odds for a follow-up March 2018 rate hike fell from 53.35% on Monday to 50.80% on Tuesday, so interest rate differentials were apparently in play again, this time in favor of the Kiwi.

Risk aversion did finally take its toll on the Kiwi, though, since the Kiwi began to tilt to the downside when risk aversion initially persisted on Wednesday.

Risk appetite got revived during the London and U.S. sessions, though. Also, odds for a follow-up March 2018 rate hike fell even further from 50.80% to 48.02% on Wednesday so the Kiwi regained some poise and began to climb higher.

However, the would-be Kiwi rally was stopped in its tracks when New Zealand’s Q3 retail sales report came out since headline retail sales only increase by 0.2% quarter-on-quarter in Q3 (0.4% expected). Worse, the previous quarter’s  2.0% increase was downgraded to a 1.8% rise.

Moreover, 7 of the 15 retail trade industry types suffered declines, which is why the core reading came in at +0.5%, missing expectations for a stronger 0.9% increase. Also, the core reading’s previous, uh, reading was likewise downgraded from 2.1% to 1.9%.

The year-on-year headline reading is also pretty bad since it comes in at 4.1%, which is the weakest annual growth in 13 quarters. In addition, the slowdown in Q3 puts an end to two consecutive quarters of strengthening annual readings.

Moving on, risk-taking persisted into Thursday, so the Kiwi regained its footing and began to climb higher again. The U.S. equities market was closed for Thanksgiving, however, so the Kiwi’s rally lost steam when the U.S. session rolled around and the Kiwi’s price action became more mixed.

Oh, New Zealand’s October trade report was released late into Thursday’s U.S. session. And while it was a disappointment (-$871M vs. -$750M expected, -$1,156M) previous, it didn’t cause the Kiwi to tank hard because a closer look at the details shows that exports surged by 20.83% but the 10.18% jump in imports was able to offset this. Even so, the surge in exports meant that New Zealand’s trade deficit narrowed in October compared to the previous month’s deficit of $1,156 million. Moreover, imports jumped because of the surge in imports of capital goods, namely the 156.21% increase in imports of transport equipment.

Getting back on topic, risk aversion briefly returned during Friday’s Asian session, to the Kiwi took hits. However, risk-taking returned during the later European and U.S. session. The Kiwi initially recovered during the European session but began to lose its footing and was already slipping lower against most of its peers during the U.S. session.

And looking at the CME Group’s Fedwatch tool, it looks like interest rate differentials were in play again (against the Kiwi) since odds for a follow-up March 2018 rate hike rose from 48% to 50%.