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Not a lot of major forex data due from New Zealand this week. Will this mean more risk sentiment-based trading for the comdoll? Here are this week’s potential catalysts for your NZD trades!

China’s CPI and trade balance data

Last week the New Zealand dollar got boosts after China printed strong manufacturing and services PMIs. And with no economic release on tap save for the building consents due on Jan. 11 at 9:45 PM GMT, we might see Kiwi dance to the tune of China’s CPI (Jan 10, 1:20 AM GMT) and trade balance (Jan 12) reports.

China’s annual inflation is expected to grow by 1.9% after seeing a 1.7% growth in November. It’s also expected to show a trade surplus of $37.44B in December – a dip from November’s $40.21B figure – despite the holiday season. Take note that significant hits or misses could set the tone for NZD’s intraday trading.

U.S. FOMC VOTING member speeches

Last week the FOMC meeting minutes release saved the dollar from its intraweek losses. See, Yellen and her gang weren’t as dovish as expected since “a few participants” are considering a faster pace of tightening throughout 2018 than implied by their official December statement.

They were also pretty excited about Trump’s fiscal stimulus plan, saying that it could lead to “a steeper path of increases in the target range.” And no, they weren’t talking about golf.

This week we’ll hear from Fed members Raphael Bostic (Jan 8, 5:40 PM GMT), John Williams (Jan 8, 6:35 PM GMT), and William Dudley (Jan 11, 8:30 PM GMT). All three are voting members in 2018, so y’all better watch their speeches closely!

Chart to Watch: NZD/JPY

NZD/JPY Daily Forex Chart
NZD/JPY Daily Forex Chart

NZD/JPY just broke above a falling channel resistance and it doesn’t look like it’s not looking back anytime soon. The 82.50 – 83.00 levels are areas to watch, as they line up with a major resistance on the daily time frame.

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Forex Chart

Some people may find that surprising, given that the only potential catalyst for the Kiwi was latest dairy auction, which didn’t really have an effect on the Kiwi’s price action, even though the GDT index rose by 2.2%.

Anyhow, like the Aussie, the Kiwi also jumped for joy on Tuesday thanks to the strong strong Chinese manufacturing PMI numbers from Markit/Caixin numbers from Markit/Caixin (51.5 vs. 50.7 expected, 50.8 previous).

And like the Aussie, the Kiwi also took hits when risk aversion came in force during Tuesday’s morning London session. And while the rise in gold prices likely helped to limit the Aussie’s losses on Tuesday, the same can’t be said of the GDT price index since the Kiwi just continued moving lower despite the 2.2% rise.

The Kiwi finally found a bottom during Wednesday’s Asian session, thanks to signs of returning appetite for risk at the time, which likely helped to buoy the higher-yielding Kiwi.

And by the time Wednesday’s morning London session rolled around, it was clear that risk-taking was the name of the game, as I noted in Wednesday’s London session recap.

Risk-taking didn’t really let up since then and so the higher-yielding Kiwi just sat back, chillaxed, and rode the risk sentiment train higher and higher.