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New Zealand is set to print its quarterly employment numbers! Will it be enough to propel the Kiwi to the top spot this week?

Here are the potential catalysts:

Employment data (July 31, 10:45 pm GMT)

Kiwi bulls didn’t have much to celebrate about even though New Zealand’s unemployment rate dipped to its lowest since Q4 2008 in Q1 2018. See, labor force participation rate jumped by 20% and wage inflation remained muted.

This week analysts are expecting a 0.4% increase in employment change while the unemployment rate is expected to steady at 4.4%.

We already know that the Reserve Bank of New Zealand (RBNZ) has a neutral stance and is more worried about inflation rather than the labor market at the moment, so unless we see significant hits or misses, it’s unlikely that we’ll see the report dictate the Kiwi’s weekly direction.

Overall risk sentiment

As you can see below, risk (and even Greenback) appetite played roles in influencing the Kiwi’s price action.

This week we have a slew of top-tier reports coming up including China’s manufacturing reports, the Fed’s monetary policy decision AND the monster NFP report. Any one of these releases could influence risk appetite, so make sure you’re around when they’re printed!

Last Week’s Price Review

The Kiwi was a net winner last week but is currently on course to closing out the week in third-to-last place (as of 7:00 am GMT).

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Forex Chart

Looking at the overlay of NZD pairs above, it looks like the Kiwi’s price action was rather chaotic. However, we do get a clearer picture if we simply remove AUD/NZD from the overlay.

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Forex Chart

As you can see, the Kiwi had a steady start before finally succumbing broadly to selling pressure during Monday’s U.S. session.

Interestingly enough, it was already clear that risk aversion was the dominant sentiment during Monday’s London session but the Kiwi remained resilient. There was no clear reason why, though.

As to why the Kiwi slumped during Monday’s U.S. session, there was no direct catalyst for that, but the surge in U.S. bond yields may have helped to negate the Kiwi’s yield advantage, making the Greenback more attractive (at the Kiwi’s expense).

At any rate, the Kiwi would eventually find support and begin trading higher again when risk appetite returned during Tuesday’s London session.

The Kiwi did hit a speed bump when New Zealand’s trade report failed to impress, but buyers were ever present, likely because the Greenback weakened during the run-up to the trade meeting between U.S. President Trump and European Commission President Jean-Claude Juncker.

And when the Trump-Juncker meeting was about to get underway, the Kiwi jumped higher on most pairs since Trump and Juncker expressed that they want a positive outcome, which caused the Greenback to tank.

And more Kiwi bulls would come out of the woodworks as the meeting progressed since rumors began to spread that the meeting was positive, which caused risk-taking to ramp up.

The Kiwi would find more buyers on most pairs after Trump and Juncker officially announced that they have agreed to de-escalate their trade dispute and start negotiations to lower trade barriers, but the buying pressure wasn’t very strong, likely because the event was already priced in because of all those rumors.

Anyhow, the Kiwi’s rise began to falter and sellers began attacking in force come Thursday, likely because of the Greenback’s broad-based recovery.

Aside from the Greenback’s strength, it’s also possible that demand for the Kiwi may have been dented because market players were switching their focus towards the ongoing trade war between the U.S. and China.

And to make matters worse (for the Kiwi), signs of returning risk aversion began to show during Thursday’s U.S. session and Friday’s Asian session.