The New Zealand dollar had a light calendar, but still out performed most of the majors this week off of counter currency catalysts.
New Zealand Headlines and Economic data
Major Market Drivers for the New Zealand Dollar
As you can see from the headlines section above, the economic calendar for New Zealand was very light and positive with commodities and manufacturing volumes ticking higher from the previous month. Commodities are New Zealand’s largest export sector, especially dairy products, so it’s likely that this week’s updates did give some level of support to the New Zealand dollar even if they arguably didn’t spark immediate significant reactions in Kiwi pairs.
Global risk sentiment was on the downswing this week to risk aversion levels, likely due to a refocus on weakening global economic data, especially when it comes to global trade. For a broad recap of this past week’s shift in global risk sentiment, check out my light coverage of this theme in my Japanese yen weekly review. This influence is likely the reason why we saw the Kiwi under perform against the safe havens (JPY and USD) for most of the week.
We think the bigger driver for Kiwi pairs was more so counter currency catalysts. The rest of the majors had a rough go on the week thanks to negative catalysts from their own regions (EUR, CHF, and GBP softened as Brexit negotiations go no where and the ECB signals weakness ahead, CAD lower after dovish BOC statement and weak housing and PMI data), and a very weak GDP report form Australia. These drivers came in the latter half of the week, which is about when we started to see the Kiwi really take off against these currencies.
That weak Australian GDP number is likely the reason why we saw a uniform move lower in Kiwi pairs during the Wednesday Asia session. New Zealand and Australia are very close trading partners, so often times when the Aussie falls to big news traders sell the Kiwi as well, and vice versa, as the economic fortunes and failures from one country is likely to affect the other.
China is also one of New Zealand’s top trading partners, so top tier economic data from China tends to see reaction in the Kiwi, which is likely the reason we saw the only other uniform move in Kiwi pairs during the Tuesday Asia session. Traders likely reacted to the weaker-than-expected Chinese services PMI number, which hit 4-month lows and was another signal of a global economic slowdown, by selling the Kiwi for the next few hours despite the positive ANZ commodity prices data that was released in the same hour.