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Positive risk sentiment boosted Kiwi from its intraweek lows last week. Can this week’s catalysts extend the bulls’ party?

Trade balance (Oct. 22, 9:45 pm GMT)

New Zealand’s trade deficit clocked in at 1.57 billion NZD in August, which is wider than the 700M NZD shortfall seen in July but is around the same as its deficit from a year ago.

Details tell us that exports had risen by an annualized rate of 3.8%, slower than the 7.1% increase seen in the previous month. Meanwhile, imports inched 2.7% higher after rising by 2.1% in July.

Luckily for Kiwi bulls, traders weren’t in the mood to price in the data miss since it was scheduled just hours before the Reserve Bank of New Zealand (RBNZ)’s monetary policy decision.

This week traders see the deficit narrowing down to 1.38B NZD in September. Note that there’s no major economic data scheduled around the trade report. That means we could see more pronounced reaction to any data hit or miss!

Overall risk sentiment

We’ve seen from last week’s price action that market risk appetite could overcome traders’ reactions to data releases.

The biggest themes to pay attention to this week include any Brexit-related updates. Just last weekend U.K. MPs voted to postpone a decision on whether they would back Prime Minister Boris Johnson’s Brexit deal until legislation needed to implement the deal has been passed through parliament.

Under the terms of the “Benn Act,” this means the BoJo must now request for a three-month Brexit delay. Yipes!

Meanwhile, Chinese Vice-Premier Liu He shared that China and the U.S. have made “substantial progress in many fields” in its latest trade talks and hinted that a trade deal could be signed as early as the summit in Chile in mid-November.

Will renewed concerns over Brexit weigh on risk sentiment? Or will optimism over a U.S.-China trade deal keep the party going for the bulls?

Missed last week’s price action? Read NZD’s price recap for Oct. 14 – 18!