Much like the Aussie, the New Zealand dollar took cues from overall risk sentiment. So why did it look like it performed better than the other comdolls?
PPI reports (Feb 19, 9:45 pm GMT)
Today at 9:45 pm GMT New Zealand will print its PPI input and output reports for Q4 2017.
In its release last November, both input and output growth had missed expectations and hinted of weaker inflationary pressure down the road. As a result, the Kiwi lost pips against its major counterparts.
This time around analysts are expecting a 0.3% uptick (from 1.0%) in input prices and a 0.4% increase (from 1.0%) in output data for Q4 2017. If the numbers continue to disappoint, then we might see another intraday selloff for the Kiwi.
Retail sales (Feb 22, 9:45 pm GMT)
New Zealand won’t see another major report until Friday when the quarterly retail sales report is printed.
Back in November the release caused pain for Kiwi bulls as the actual figures disappointed even the weaker growth that analysts had expected.
However, details also revealed that the slowdown had marked the end of end of the British and Irish Lions rugby tour during the previous period.
This week market players are betting on a 1.4% growth (from 0.2%) for the headline retail sales and a 0.7% uptick (from 0.5%) for core retail sales.
With higher expectations comes higher possibilities of disappointment, so y’all better keep your eyes glued to the tube when this one is printed!
Last Week’s Price Review
The Kiwi is the second strongest currency of the week (as of 8:00 am GMT). However, the Kiwi’s performance wasn’t really as outstanding as it sounds.
A quick look at the ranking table above shows that the Kiwi’s wins were rather small, except against the U.S. dollar and the Loonie.
Moreover, the overlay of NZD pairs shows that most Kiwi pairs were actually trading roughly sideways on Monday and Tuesday before getting a volatility injection on Wednesday, and then traded roughly sideways again after that.
As to why the Kiwi was not very lively this week, well, there’s no clear reason for that but it’s possible that traders are still mulling over last week’s RBNZ Statement since the RBNZ downgraded its CPI forecasts but maintained its projection for a rate hike by Q2 2019.
Anyhow, the Kiwi got a bullish infusion on Wednesday when the RBNZ released its latest survey of expectations since that showed that 2-year inflation expectations of businesses surveyed by the RBNZ rose from 2.0% to 2.1%.
Follow-through buying was only very brief and minimal, though, likely because the report also showed that inflation expectations for the year ahead were flat. Also, risk sentiment was somewhat jittery ahead of the U.S. CPI report.
Speaking of the U.S. CPI report, that had the same effect on the Kiwi’s price as it did on the Aussie’s price action.
The hard slump immediately after the better-than-expected CPI report was released was also likely due to interest rate differentials and monetary policy divergence.
As for the quick rebound, the Greenback selling and risk-on vibes after the U.S. CPI report was released likely helped to push the Kiwi higher.
The Kiwi’s price action became mixed while trading mostly sideways after that, though.