Anti-dollar sentiment might have boosted NZD/USD, but risk aversion still dragged the Kiwi lower. Will we see the same themes this week?
Here are potential catalysts that might affect the comdoll’s prices:
Trade balance (Jun 24, 11:45 pm GMT)
New Zealand clocked in a 433M NZD trade surplus in April, much lower than the 824M NZD figure in March. This is despite exports rising by 11.7% from a year ago and outpacing imports’ 7.3% annualized growth.
Traders still weren’t impressed. They sold the Kiwi across the board and didn’t come up for air until mid-Asian session trading.
This week analysts expect to see a 200M NZD surplus for the month of May.
Note that the report will come out ahead of the big RBNZ decision this week. And judging by last week’s GDP release, it looks like a lot of traders are already pricing in easier policies from the RBNZ.
It’s gonna take a REALLY strong trade balance report to ease concerns over New Zealand’s export activities!
RBNZ’s statement (Jun 26, 3:00 am GMT)
As expected, the Reserve Bank of New Zealand (RBNZ) cut its interest rates to a new record low of 1.50% in May.
The central bank cited reduced population growth, house price softness, low business sentiment, and trade concerns among the reasons for the cut.
What traders didn’t expect was for the RBNZ to hint of even more easing down the road. In fact, the statement reflected that “a lower path for the OCR over the projection period was appropriate.”
The Kiwi spiked lower at the RBNZ’s additional dovishness, but soon recovered some of its losses in the later trading sessions.
Not a lot of market geeks are expecting another RBNZ rate cut this week, but that doesn’t mean that the event will be a non-mover. See, analysts believe that, between global trade uncertainties and low inflation pressures, Governor Orr (should we start calling him “GovernOrr?”) and his friends might have to cut rates again.
Watch out for continued dovishness within the RBNZ team, which could hint at the central bankers’ next rate cut schedule. Word around is that it could come as soon as August, but we might see another one sooner!
Missed last week’s price action? Read NZD’s price recap for June 17 – 21!