New Zealand is printing its GDP report this week! Can it finally push the Kiwi in the green?
Quarterly GDP report (Sept. 19, 10:45 pm GMT)
New Zealand’s headline GDP might have met market expectations in Q1 2018, but weaknesses in key components such as mining, construction, services, and household spending inspired traders to sell the Kiwi across the board.
This week analysts expect to see that the economy had rebounded from 0.5% to 0.8%. However, the annualized rate is also seen at 2.5%, which is even weaker than the four-year low of 2.7% that we saw last quarter.
In its recent statement the Reserve Bank of New Zealand (RBNZ) maintained that its “next OCR move could be up or down,” but also pushed its next rate hike farther due to weak growth.
Will this week’s release convince the RBNZ to switch to a neutral stance?
Global trade updates
As you can see below, Kiwi traders still take cues from overall risk sentiment and global trade updates for direction.
This week China is set to ask the World Trade Organization (WTO) to impose sanctions on the U.S. for not fulfilling its anti-dumping penalties.
And then there’s the teeny tiny issue of the U.S. raising tariffs on another $200 billion worth of Chinese goods despite Washington extending invites to China for another round of trade-related talks last week.
The Donald seems to be set in imposing the next set of tariffs, however, so you might want to buckle up and not miss any headlines over the next couple of days.
Last Week’s Price Review
The Kiwi is mixed but a net loser for the week (as of 7:00 am GMT), so the Kiwi will soon be marking its third consecutive week of net losses.
Looking at the overlay of NZD pairs, we can see that the Kiwi’s price action was rather messy. There are also clear instances of diverging price action, especially during the later half of the week. And that implies that the Kiwi was somewhat vulnerable to opposing currency price action.
With that said, the Kiwi is a net loser for the week because it was pummeled by sellers during Monday’s U.S. session and Tuesday’s London session.
What happened back then? Well, risk sentiment was actually mixed during Monday’s U.S. session, but it’s probable that the Kiwi was dragged lower across the board because of sliding commodity prices at the time.
As for the Kiwi’s slump during Tuesday’s London session, that was likely due to the risk-off vibes, thanks to the WTO’s September 21 meeting agenda since that revealed that the WTO’s dispute settlement body was scheduled to hear China’s request for permission to impose sanctions on the U.S. for anti-dumping violations.
However, there was just not enough buying buying pressure to push most NZD pairs above last week’s closing prices (dashed, horizontal line).