The RBNZ is up this week! Will its decision move Kiwi’s prices this week? What other factors can affect the comdoll’s price action?
Trade balance (Sept 24, 11:45 pm GMT)
New Zealand broke its four-month streak of trade surpluses to register a trade deficit in July.
Turned out, a 3.1% annualized increase in imports and a 5.8% decline in exports added up to a 685M NZD trade deficit for the month and dragged the economy’s twelve-month deficit from 4.5B NZD to 5.46B NZD.
Analysts don’t see improved numbers in August either, as they expect trade deficit to widen to 1.35B NZD for the month.
As tradeable as the potential weak trade data is, you might want to hold off from making big trades as New Zealand’s central bank is scheduled to print its policy decision only hours after the trade balance release.
RBNZ policy decision (Sept 25, 3:00 am GMT)
The Reserve Bank of New Zealand (RBNZ) shook the markets last month when it cut its interest rates by 50 basis points to a fresh record low 1.00% (analysts only saw a 25 bp cut). In addition to that, Governor Orr also hinted that they might “have to use negative interest rates” if needed.
The “shock and Orr” dragged Kiwi to new intraweek lows at the news but it recovered at least half of its losses in the next trading days.
This week market players see the central bank maintaining its rates at 1.00%. For one thing, RBNZ members might want to see the impact of their sharp rate cut before they make any more moves.
Orr and his team also seem to favor making policy changes when they also get to print a full Monetary Policy Statement like they did last month and in May.
That doesn’t mean that the event will be a non-mover, though! Keep close tabs on comments about the central bank’s biggest concerns including global demand slowdown, global trade uncertainty, and additional stimulus from other central banks.
Market risk sentiment
In case you missed Kiwi’s price action last week, you should know that the comdoll was mostly trading sideways until near the end of the week when a combo of strong U.S. dollar and risk aversion over China suspending its scheduled visits to U.S. farms next week dragged it lower across the board.This week pay attention to updates on the meetings between high level U.S. and Chinese reps scheduled in early October. Word around is that Trump’s unwillingness to discuss a partial trade deal influenced China’s decision to cancel its farm visits next week.
Meanwhile, Saudi Arabia is planning use this week’s U.S. General Assembly to convince a couple of peers that Iran is behind the September 14 attack on its oil facilities.
If Saudi manages to drum up support, then the increased tensions in the oil-producing region could raise oil prices and weigh on risk appetite.