Kiwi lost pips to weak data and trade uncertainties last week. Can the RBNZ’s decision reverse its trends this week?
Here are catalysts that might affect the comdoll’s price action this week:
Labor market numbers (Aug 5, 11:45 pm GMT)
Unemployment in New Zealand dipped from 4.3% to 4.2% in Q1 2019, which was in line with what analysts had expected.
A closer look at the quarterly report, however, showed that wages only rose by 2.0% when many saw it rising by 2.1% after the previous quarter’s 1.9% gain.
The tepid wage growth, combined with employment rate dropping to its lowest since Q2 2017, caused downside breakouts for Kiwi’s intraweek ranges back in April.
This week analysts expect to see the unemployment rate rise back up to 4.3%, while employment is expected to rise by 0.3% after seeing a 0.2% dip in Q1 2019.
I don’t see any other top-tier news scheduled around the release. That means traders’ initial reaction to the report could play out for the rest of the trading session. Watch this one closely, forex friends!
RBNZ’s policy decision (Aug 7, 3:00 am GMT)
After cutting its rates by 25 basis points in June, Reserve Bank of New Zealand (RBNZ) members took a chill pill and kept its rates at 1.50% in July.
However, they also noted in their statement that “a lower OCR may be needed” over time.
Well, market geeks think “over time” means “August” as they expect RBNZ to cut its rates by another 25 basis points to 1.25% this week.
And why not? RBNZ’s major concerns like soft domestic data, easier policies of its neighbors (*cough* RBA *cough*) and global trade uncertainties have intensified since central bank members last changed their interest rates.
With most traders expecting a rate cut, though, Kiwi’s reaction to the report will likely depend on RBNZ’s hints of further rate cuts in the foreseeable future.
Some analysts think we might see another one before the year ends, while others are penciling in the next one in early 2020.
Watch the details of the release closely and see if you can get hints from this month’s statement!
Missed last week’s price action? Read NZD’s price recap for July 29 – August 2!