The Kiwi’s moves were dictated by the price action of its peers last week. Will it have a chance at making its own waves this week?
Here’s a list of the potential catalysts:
Quarterly GDP report (Mar. 20, 9:45 pm GMT)
New Zealand’s economy expanded by 0.3% in Q3 2018, much lower than the 1.0% uptick in Q2 and the 0.6% increase that analysts had expected.
The annualized reading didn’t look much better with its 2.6% increase, which was lower than the 3.2% growth seen in Q2 and analyst estimates of a 2.8% growth.
The weaknesses were mainly seen in finance and insurance services; transport, and retail trade, though it didn’t help that mining and construction also printed to the downside.
The combo of a surprisingly weak GDP, overall risk aversion in the markets, and ANZ calling an RBNZ rate cut dragged the Kiwi down to new intraweek lows.
This week, market geeks expect to see the GDP slip further from 2.6% to 2.5% while the quarterly rate is expected to tick higher from 0.3% to 0.6%.
The economy is already experiencing a slowdown in growth and demand, but it won’t help that business and personal services – which make up a huge chunk of economic activity – are also seeing weaknesses lately.
Last but not the least, temporary disruptions like low hydro lake levels and reduced gas supplies pushing electricity prices higher in Q4 could also weigh on overall growth numbers.
If the report prints another downside surprise, then we could be in for more Kiwi weakness. Recall that the Reserve Bank of New Zealand (RBNZ) has penciled in a 0.8% growth for the period.
If we see positive surprises, however, then the New Zealand dollar might be able to extend its gains from the previous week.
Market risk sentiment
With not a lot of top-tier reports scheduled in New Zealand, the Kiwi could once again take cues from its major counterparts.
This week pay close attention to employment reports from the U.K. and Australia as well as monetary policy decisions from the Fed, European Central Bank (ECB), and the Swiss National Bank (SNB).
And then there’s Brexit updates. We already know that British policymakers don’t like a no-deal situation by the end of this drama and are even open to an extension. This week, we’ll see if PM Theresa May can push her existing Brexit deal among her peers.
Missed last week’s price action? Read NZD’s price recap for March 11 – 15!