New Zealand won’t be printing a lot of top-tier reports this week. So what catalysts can move the Kiwi? Here’s a short list:
NZIER business confidence (Oct. 1, late U.S. session)
The quarterly report weighed on the Kiwi a few months ago when it printed that 19% of businesses are expecting a deterioration of economic conditions, higher than the 10% reading seen in the previous release.
Will businesses feel a little better about the economy this time around? Business confidence is widely believed to be tied to the economy’s performance so, in the absence of other market catalysts, you can bet that Kiwi bulls and bears will watch out for the report.
Overall risk sentiment
Can you believe we’re facing another NFP week? New Zealand won’t be printing a lot of top-tier reports over the next couple of days, so the Kiwi’s price action will most likely take cues from market risk sentiment.
This week pay close attention to how far the post-FOMC optimism will go. Will traders go back to worrying about the U.S.-China trade war? Or will the Fed’s plans to tighten continue to push high-yielding bets higher?
Stay glued to the tube for any news that might affect demand for riskier assets!
Last Week’s Price Review
The Kiwi was last week’s champ, but it’s having a bad run this week and is currently trailing behind in second-to-last place (as of 7:00 am GMT).
Like the Aussie, the Kiwi started the week by gapping lower on most pairs, thanks to news over the weekend that China cancelled trade talks.
But unlike the Aussie, the Kiwi continued to trend lower for the rest of the day (after closing the gaps), apparently because the Kiwi was more sensitive to the risk-off vibes on Monday.
Signs of risk-taking began to show during Tuesday’s Asian session and then became more pronounced during Tuesday’s European session, so the higher-yielding Kiwi got a chance to recover some lost ground on most pairs.
Unfortunately for the Kiwi, risk aversion returned during Tuesday’s U.S. session, so the Kiwi’s recovery was cut short and most NZD pairs began to drift lower.
No worries, though, since ANZ’s Business Outlook Survey revealed that business confidence bounced from -50 to -38 in September, which means that a net of only 38% of businesses surveyed expect business conditions to deteriorate in the year ahead, down from 50%.
There was little follow-through buying, however, and most NZD pairs began to turn lower, likely because of profit-taking and the Greenback’s strength in the run-up to the FOMC statement.
And when the Fed’s FOMC finally announced their monetary policy decision, the Kiwi jumped broadly higher as the Greenback cratered. However, the Greenback quickly regained its footing and so the Kiwi just as quickly returned its gains.
As a side note, the RBNZ delivered its monetary policy statement after the Fed did, which caused the Kiwi to toss and turn but was ultimately a dud, probably because the RBNZ maintained its neutral policy bias and didn’t really say anything new.
Getting back on topic, the Kiwi’s price action became more mixed on Thursday but became somewhat uniform again come Friday.
And oddly enough, NZD pairs were tilting broadly lower, even though risk-taking was the name of the game in Asia.