No major news from New Zealand this week, so we have to pay closer attention to trends for Kiwi’s major counterparts. Which events should we watch out for?
China’s data dump (Jan 18, 7:00 am GMT)
On Thursday’s Asian session trading China is expected to print a slew of top-tier economic reports. For starters, 2017 GDP is expected to come in at 6.7%, a tad lower than the 6.8% we saw in Q3.
Annualized industrial production (6.1%) and retail sales (10.2%) are expected to keep their growth rates, while fixed asset investment (ytd/y) could dip from 7.2% to 7.1% in December.
Oh, and note that China’s statistics bureau is conducting a presser around the release. Watch out for any remarks regarding the impact of the government’s efforts to crack down on pollution and risky funding on overall economic growth!
More dollar selloff?
As mentioned below, Kiwi’s price action could have danced to the tune of overall dollar strength and bond yields price action.
So while there are no top-tier reports due in New Zealand this week, you should keep an eye on overall risk appetite and U.S. dollar demand for clues on how Kiwi will trade in the next couple of days.
Last Week’s Price Review
The Kiwi had a good run last week and the Kiwi’s winning streak ain’t over yet since the Kiwi is a net winner yet again this week. In fact, the Kiwi is currently the second best-performing currency of the week (as of 8:00 am GMT).
The Kiwi had a somewhat steady start, likely because risk sentiment was a bit mixed on Monday. Risk sentiment improved on Tuesday, though, so the Kiwi found buyers. However, the Kiwi encountered sellers later during Tuesday’s U.S. session, forcing the Kiwi to surrender its gains and close out the day on a mixed note.
There was no clear reason for the Kiwi’s broad-based weakness, but it’s highly probable that the surge in bond yields negated the Kiwi’s yield advantage. It’s also probable that the Greenback strength may have weighed on NZD/USD, dragging other Kiwi pairs lower along with it.
In any case, risk-taking persisted on Wednesday so the Kiwi later found support (except on NZD/JPY) and began trading higher again before becoming more mixed when risk aversion returned and bond yields surged during Wednesday’s morning London session. And as noted in Wednesday’s London session recap, this was apparently due to rumors that China may slow down or halt its purchases of U.S. government bonds.
Risk-taking resumed on Thursday, though, so the Kiwi found buyers once again. And this time, even NZD/JPY began to tilt to the upside.
And while the Kiwi also stumbled when the minutes of the December ECB meeting were released and risk aversion returned, the Kiwi’s slide wasn’t as severe as that of the Aussie’s… more of a speed bump really.
Anyhow, risk appetite made a comeback during Thursday’s U.S. session so the Kiwi began trading higher across the board again before tilting to the downside when Friday rolled around, likely because of profit-taking since risk-taking was still the name of the game as of the late Asian session.