Last week the New Zealand dollar danced to the tune of risk sentiment. Will top-tier reports make any dent this week?
Let’s take a look at the possible catalysts:
Quarterly GDP report (March 14, 9:45 pm GMT)
On Wednesday (early Thursday for Asian session traders) we’ll see if New Zealand’s economy has slowed down as some analysts are expecting.
Market players expect the Q4 2017 GDP to come in between 0.6% to 0.8% after showing a 0.6% uptick in the previous quarter. Remember that, in its last release, we found out that a decrease in utilities and softer growth in services had dragged a construction-fueled growth.
With employment and trade numbers coming in strong in the last months of 2017, there’s a chance that we’ll see an upside surprise.
A miss, however, will fuel speculations that the Reserve Bank of New Zealand (RBNZ) won’t be raising its rates until 2019. Yipes!
Overall risk sentiment
As you can see below, Kiwi mostly reacted to news that affected overall risk sentiment.
Watch out for updates on Trump’s tariff exemptions, as well as his plans to meet up with his future BFF Kim Jong Un. News that hint at cooperation would likely boost the comdoll, while hints of geopolitical or economic disputes could weigh on the high-yielding currency.
Last Week’s Price Review
The Aussie wrestled the top spot from the Kiwi, so the Kiwi found itself in second place (as of 8:00 am GMT). However, that could still change during the course of the trading day since the Aussie barely edged out a win against the Kiwi.
The Kiwi captured the bulks of its gains on most pairs on Tuesday, apparently because of news that North Korea is open to denuclearization talks, which triggered a bout of intense risk-taking that caused commodities to rally as well.
The Kiwi was already underpinned since Monday, though, and that was likely due to the new narrative at the time that fears of a trade war were easing because of pushback from U.S. politicians and U.S. businesses against Trump’s tariff plans.
Interestingly enough, news that Trump’s economic adviser, Gary Cohn, has resigned, which apparently reignited fears of a potential trade war and caused risk aversion to make a comeback, only caused the Kiwi to dip slightly against most of its peers. In fact, the Kiwi even gained against the Aussie and the Loonie, which were both reeling at the time.
In any case, the Kiwi’s price action became mostly range-bound after that. Although it continued to take even more ground from the safe-havens yen and Swissy, likely because of the prevalence of risk appetite, which market analysts attributed to easing fears of a possible trade war, especially after rumors began to spread that Trump will exempt some countries from the planned tariffs.