Last week the New Zealand dollar was vulnerable to opposing currency price action as well as overall risk aversion. Will it get to dance to its own tune this week?
Employment data releases
Tomorrow at 9:45 PM GMT we’ll see New Zealand’s quarterly labor market numbers.
Analysts are expecting the unemployment rate to tick higher from 4.6% to 4.7%, while the number of employed workers is expected to dip from 2.2% to a 0.4% growth in Q4 2017.
A higher unemployment rate would break the three-quarter-long streak and lift the number from its lowest since Q4 2008. Pay close attention to the employment change and labor market participation, though, as better numbers from either or both factors could ease the sting of higher jobless rate.
RBNZ policy statement
Since the Reserve Bank of New Zealand we’ve seen wild price swings for Kiwi and New Zealand’s quarterly inflation print below its expected growth. But are these enough to rain on the RBNZ’s parade this week?
Market players aren’t expecting any changes from Grant Spencer and his team this week, especially since they might want to keep the boat steady until Adrian Orr takes over as captain.
Of course, this might not stop the central bank from trying to influence Kiwi’s price action in either direction.
The RBNZ will print its monetary policy statement on Wednesday at 8:00 PM GMT, followed by a presser an hour later. Governor Spencer will end with a testimony in Wellington on Thursday at 12:00 AM GMT.
Last Week’s Price Review
The Kiwi is mixed for the week (as of 8 am GMT). And a quick glance at the overlay of NZD pairs below shows that the Kiwi’s price action was rather messy, with diverging price action on some pairs to boot, which implies that the Kiwi was vulnerable to opposing currency price action.
The only major economic report for New Zealand this week was New Zealand’s December trade report. And while that printed a strong NZ$640 million surplus (-$125M expected, -$1,233M previous), that very clearly didn’t really do diddly squat for the Kiwi’s price action.
Well, it’s possible that the Kiwi tried to climb higher because of New Zealand’s trade report. However, it’s likely that the prevalence of risk aversion allowed Kiwi bears to overwhelm the Kiwi bulls.
The Kiwi finally popped higher across the board on Wednesday, though, apparently because risk appetite finally made a comeback after getting banished for two days.
Unfortunately for the higher-yielding Kiwi, the Kiwi, like the Aussie, also encountered selling pressure ahead of the FOMC statement, even though risk-taking persisted at the time.
And when the FOMC statement finally came around, that’s when price action on the Kiwi began to diverge since the Kiwi continued to take ground from the Aussie and the yen while trading somewhat sideways against the Greenback and the Loonie, and tilting slightly to the downside against everything else.
Hopefully, the Kiwi will have more uniform price action next week. The RBNZ statement is coming up after all.