New Zealand data economic data was extremely light this week, but it only took one event to set the bullish tone for Kiwi traders and put it in position to be the second best performing currency of the week!
Major Market Drivers for the New Zealand Dollar
Global risk sentiment was pretty much on the downswing this week, which is likely the reason why we saw the Kiwi start the week weaker against the other majors, more so against the “safe havens” than the other “high-yielders” like the Aussie and the Loonie. This sentiment was likely on the fresh news from China on its latest GDP reading, and it’s big trouble for global growth and risk sentiment when the world’s second largest economy is growing at its slowest pace since 1990.
Fortunately for Kiwi bulls, sentiment shifted for the New Zealand dollar at the close of the Tuesday trading session when New Zealand’s quarterly CPI read came in better-than-expected at 1.9% y/y. Analysts believe that this number is good enough to hold off any ideas of a rate cut by the Reserve Bank of New Zealand this year, which is why the Kiwi rallied on the news, even against the surging British pound (albeit briefly).
Priced action remained mostly uniform for the rest of the week, ending in one last surge in the Kiwi as risk-on sentiment came back to the markets Thursday afternoon, likely on U.S. tech earnings, a temporary end to the partial U.S. government shutdown, and the Fed possibly close to ending its balance sheet reduction program.
New Zealand Headlines and Economic data
- NZ inflation edges up, prospects of a rate cut dims
- New data reveals net migration may have peaked in 2016