There are no top-tier reports scheduled from New Zealand this week, so it looks like we’re gonna see the comdoll dance to the tune of the Greenback and overall risk sentiment in the markets.
This week pay close attention to how the market reacts to Trump pulling the U.S. out of the G7 communique that addresses issues such as jobs, climate change, gender equality, and investing in growth “that works for everyone.”
And then there’s the U.S.-North Korea nuclear summit happening in Singapore this week. Word around the hood is that Trump is planning on winging the meeting instead of getting hoardes of people with a bunch of papers with him.
An unscripted meeting between two of the most headstrong leaders? What could go wrong, amirite?
Meanwhile the Fed, ECB, and BOJ are scheduled to share their monetary policy decisions this week. The Fed is widely expected to raise its interest rates; the ECB might finally hint at tapering its easy policies, and the BOJ could cry uncle and set more realistic inflation expectations. Exciting times!
Last Week’s Price Review
Like the Aussie, the Kiwi is also turning in a mixed performance for the week (as of 7:00 am GMT). The Kiwi is on the winning side, though, so if the Kiwi manages to keep or improve its ranking, then that would mean two weeks of net wins for the Kiwi.
The Kiwi’s price action looks messy at first glance. However, we get a cleaner picture if we simply remove AUD/NZD and NZD/CAD from the overlay of NZD pairs.
Looking at the chart above, we can see that the Kiwi’s price action was rather similar to the Aussie’s price action in that the Kiwi also had a strong start, likely because risk-taking dominated on Monday.
The Kiwi’s rally also stalled during Tuesday’s U.S. session, even though risk-taking continued.
Unlike the Aussie, however, the Kiwi didn’t really have a top-tier event like the RBA statement on Tuesday. It’s therefore probable that the Kiwi’s rally took a breather because of the Greenback’s broad-based rally at the time.
Moving on, the Kiwi began to encounter selling pressure on Tuesday as risk appetite began to fade during the Asian session.
Appetite for risk later returned during Tuesday’s morning London session. However, the Kiwi got kicked broadly lower with its fellow comdolls. And it’s quite likely that the Kiwi weakened further because of retreating commodity prices at the time.
Risk-taking didn’t really let up during Tuesday’s U.S. session, though. Also, commodities began to recover, which is likely why the Kiwi also began to find support. In fact, the Kiwi even began to tilt to the upside come Wednesday, likely because of risk-taking persisted during Wednesday’s Asian session.
Risk-taking did eventually begin to show signs of winding down when Wednesday’s London session rolled around. It’s also quite likely that market players were abandoning the Kiwi in favor of the euro since expectations that the ECB may announce an end to its QE program began to ramp up on Wednesday, thanks to hawkish rhetoric from ECB officials.
At any rate, the Kiwi began to cede ground after that. And the Kiwi couldn’t really attempt a broad-based recovery since risk aversion began to dominate during Thursday’s London session and U.S. session, as well as Friday’s Asian session.