The Kiwi is in for a busy week, folks! Check out these calendar events that might knock the comdoll from its top spot from last week.
Quarterly employment numbers (November 6, 9:45 pm GMT)
The Kiwi was triple roundhouse-kicked lower in late July after New Zealand printed weak labor market numbers in Q2.
While the unemployment rate edged lower for a fifth consecutive quarter, details also revealed that participation rate, underutilization rate, and wages hinted at weaker labor market prospects.
Will we see even weaker numbers this week? Analysts don’t expect changes from New Zealand’s employment growth (0.5%), unemployment rate (4.5%), participation rate (70.90%), and quarterly labor cost index (0.6%) in Q3 2018.
If you’re planning on trading this report, remember that the U.S. will likely be releasing mid-term election exit polls around this time. This means the report could take a backseat to U.S. politics especially if we don’t see any significant hits or misses in the quarterly numbers.
Inflation expectations (November 7, 2:00 am GMT)
At the heels of the labor market data is the Reserve Bank of New Zealand (RBNZ)’s quarterly inflation expectations report.
Back in August, the central bank noted that the path to its 2.0% inflation target might be “bumpy” thanks to “one-off price changes from global oil prices, lower exchange rate, and announced petrol excise tax rises expected.”
Will the RBNZ continue to point to these “one-off price changes” in its report this week?
RBNZ’s statement and presser (November 7, 8:00 pm GMT)
Governor Orr and his team didn’t really make a splash in September when they maintained their interest rates at 1.75% as many had expected.
This week’s release promises to be a more eventful one with the central bank also releasing a quarterly statement which includes its updated projections on inflation, growth, and monetary policies.
Take note that Orr will also conduct a presser an hour after the statement is released. The last time we saw a rate decision + projections + presser combo was in August when the RBNZ executed a “dovish hold” that sent the Kiwi lower across the board.
Make sure you don’t miss this one!
Last Week’s Price Review
The Kiwi is THE top-performing currency of the week (as of 8:00), which is an impressive recovery since the Kiwi finished in second-to-last place last week.
And the Kiwi’s bounce this week can be attributed to the risk-friendly vibes throughout the week, as well as easing concerns surrounding the ongoing trade war between the U.S. and China.
The Kiwi started the new week by trending higher across the board, thanks to the risk-friendly vibes in Asia.
Unfortunately for NZD bulls, risk aversion returned during Monday’s U.S. session, so the Kiwi beat a hasty retreat across the board. All NZD pairs closed out the day above last week’s closing prices, though (dashed, horizontal line).
Anyhow, risk appetite got revived during Tuesday’s Asian session, so NZD bulls tried to bid the Kiwi higher again. Demand for the Kiwi was also very likely sustained when Trump said during an interview that he thinks that the U.S. and China will be able to hammer out ”a great deal.”
NZD bulls would finally run out of steam during Tuesday’s U.S. session. And when Wednesday rolled around, the Aussie encountered sellers when ANZ’s Business Confidence index was released, even though the reading improved from -38.3 to -37.1. And more bears would come to attack the Kiwi when China’s PMI reports failed to impress.
Oddly enough, the Kiwi continued to take hits even as risk-taking intensified during Wednesday’s London session.
There were no apparent catalysts at the time, so I conjectured that the Kiwi may still be reeling from the disappointing Chinese PMI reports, although I also noted that the Kiwi’s weakness may have been due to month-end flows. It’s also possible reason is that market players were abandoning the Kiwi to load up on equities.
In any case, NZD bulls eventually regained their footing on Thursday, very likely because of news that China’s Politburo has hinted that more stimulus are planned.
November also started on an optimistic note, which may have sustained demand for the Kiwi.
And like the Aussie, the Kiwi also had a bullish reaction to the following tweet from Trump:
Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!
— Donald J. Trump (@realDonaldTrump) November 1, 2018
And more NZD bulls would join the fray to cement the Kiwi’s gains when a Bloomberg report cited “four people familiar with the matter” as claiming that Trump “has asked key U.S. officials to begin drafting potential terms” for a trade deal with China.