A lack of domestic data contributed to a choppy Kiwi price action last week. Can this week’s catalysts produce a one-directional move for the comdoll?
Quarterly CPI report (Oct 15, 9:45 pm GMT)
Consumer prices rose by 1.7% from a year ago in Q2 2019, higher than the 1.5% growth seen in the first quarter and in line with the 1.7% uptick that the Reserve Bank of New Zealand (RBNZ) had estimated for the period.
The quarterly figure also inspired good vibes with its 0.6% growth that’s higher than the 0.1% increase in Q1 2019 and in line with analysts’ expectations.
NZD spiked higher against its counterparts during the Asian session but eventually gave up its gains when other factors weighed on the comdoll in the next trading sessions.
This week market players see the quarterly CPI maintaining its 0.6% increase but its annualized gain slow down from 1.7% to 1.4%.
Remember that RBNZ has taken cues from low global growth and expected inflation rates, which it believes is dragging long-term interest rates (including its own) around the world.
If consumer prices miss analysts’ expectations, then market geeks could expect another rate cut from RBNZ. But if it shoots higher than markets are expecting, then we could see another NZD rally during the Asian session.
Overall risk sentiment
We know from last week’s price action that a lack of domestic data from New Zealand exposes the Kiwi to countercurrency price action and global risk sentiment.
This week pay attention to any updates on the U.S.-China trade negotiations. Last week’s discussions have resulted in a “Phase 1” trade deal where China promises to buy U.S. farm goods while the U.S. agrees to suspend October tariffs.
Talks are expected to resume in China next month, though updates from either side could still dissolve the current verbal agreement.
Meanwhile, the clock is ticking for Brexit negotiations with only a couple of weeks left until the deadline. Positive comments boosted market optimism last week, but markets will soon need deets if the bulls want to maintain their momentum.
Last but not the least, China is set to print key economic data over the next couple of days. It’s September trade surplus is expected to widen from the previous month, while quarterly growth is seen at 6.1% after clocking in at 6.2% in Q2 2019.
Missed last week’s price action? Read NZD’s price recap for Oct. 7 – 11!