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Will Kiwi bulls reclaim their glory this week? Here are catalysts you should watch out for.

Business NZ manufacturing index (Dec 13, 9:30 pm GMT)

A better-than-expected September reading printed last month helped the Kiwi gain pips against its counterparts before risk sentiment took over its price action.

This week we’ll see if the unofficial index clocks in a figure higher than its 53.5 reading in September. Take note, however, that China will dump a bunch of mid-tier economic releases later in the trading session. Mae sure you’re ready with your exit strategies before China unleashes its reports!

Overall risk sentiment

As you can see below, Kiwi players still take their cues from dollar demand and risk appetite.

Watch out for potential catalysts from around the world including the U.K. Parliament’s Brexit vote, SNB and ECB’s policy statements, and top-tier U.S. economic releases.

Oh, and don’t forget updates on the U.S.-China trade negotiations! Word around is that China has summoned the U.S. ambassador in Beijing as protest over the detention of senior Huawei executive in Canada. Will China’s moves lead to further escalation in the economic giants’ trade war?

Last Week’s Price Review

The Kiwi became part of the winners’ club again last week, but the Kiwi’s membership will likely be revoked this week since the Kiwi is currently on track to closing out the week in third-to-last place (as of 8:00), thanks to the strong aversion to risk during the week.

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

Like the Aussie, the Kiwi also had a promising start since the Kiwi gapped higher against everything (except the Aussie) thanks to risk-friendly news over the weekend that the U.S. and China had agreed to a trade war truce.

But unlike the Aussie, follow-through demand on the Kiwi was apparent since NZD pairs just steadily rose higher as the day progressed.

And that’s probably because the Kiwi was more sensitive to USD weakness since the Greenback was reeling in pain during Monday’s U.S. session, due to the yield curve inversion of some U.S. bonds, which fueled speculation of a possible U.S. recession.

The yield curve inversion actually caused risk sentiment to deteriorate on Tuesday, but the Kiwi just charged higher during Tuesday’s Asian session, likely because the Kiwi was still feeding off the Greenback’s weakness.

Risk aversion intensified during Tuesday’s London session, though, and the Kiwi’s resilience finally began to crack.

The Kiwi also got an extra bearish kick at the start of Tuesday’s U.S. session, thanks to the WSJ CEO Council since national security adviser John Bolton was stressing the need for legislation to ban imports of products and services rising from U.S. intellectual property theft, while economic adviser Larry Kudlow said he has “no assurances” for a deal and that a deal “may not get done” even.

Trump also sent out these tweets, which raised some trade-related concerns.

Oddly enough, the Kiwi’s price action became more mixed and roughly sideways after that.

Most NZD pairs had a slight downward tilt, though, likely because of the persistent risk-off vibes. Even so, it’s kinda strange that the Kiwi didn’t weaken too much.

Anyhow, broad-based selling pressure would return during Wednesday’s U.S. session, likely because the Greenback was began to flex its muscles at the time, thanks to fading fears of a U.S. recession due to the inversion of some U.S. bonds, market analysts say.

And more bears would come out of the woods later, thanks news that Huawei’s global CFO was arrested in Canada for extradition to the U.S., which fueled growing doubts that the trade war truce will not end with a deal.

The Kiwi eventually found support when the Greenback began to weaken during Thursday’s U.S. session.

Heck, NZD bulls even began to win out after a Wall Street Journal report which claimed that Fed officials “are considering whether to signal a new wait-and-see mentality after a likely interest-rate increase at their meeting in December, which could slow down the pace of rate increases next year.”

It also likely helped that risk sentiment also finally began to show signs of recovering during Friday’s Asian session.