Light economic calendar week for the Kiwi, but it still managed to make some gains thanks to rising global risk sentiment and counter currency flows.
New Zealand Headlines and Economic data
- New Zealand food prices increased 0.4% in February 2019. After seasonal adjustment, they rose 0.7%
- New Zealand Manufacturing Index shows expansion at 53.7 vs. 53.0 previous
- New Zealand immigration numbers tick up
Major Market Drivers for the New Zealand Dollar
Economic headlines and updates from New Zealand were scarce this week, so it’s likely that global risk sentiment and counter currency moves were the bigger drivers for Kiwi pairs.
Global risk sentiment was leaning towards positive for a good chunk of the week, arguably influenced by several factors including positive surprises from this week’s top tier global economic reports (most notably a bounce back in U.S. retail sales and the latest U.K. GDP report) and likely from the latest Brexit developments (no-deal Brexit rejected; Brexit extension supported; signs of deal still being worked on between DUP and U.K. government).
We also got positive signs from the ongoing U.S.-China trade situation and the potential stimulus moves as China plans to reform its foreign investment laws and vows new tax cuts. All combined, these are likely the reasons why we saw the Kiwi perform the best against the safe havens, and generally out performed its close trading partner’s currency, the Australian dollar.
From the counter currency perspective, the wild ride that was this week’s series of Brexit votes seems to have brought a bullish tilt to the European currencies, with the euro and Sterling easily beating out the other majors on the week as a no-deal Brexit is a lower probability outcome now. And Canadian dollar bulls were supported this week by another strong outing by oil bulls, lifted by expectations of export cuts from Saudi Arabia and Venezuela, as well as reduced output from the U.S.
Focusing on New Zealand specifically, again the economic calendar was light, but it looks like we did get a uniform reaction from the latest update on New Zealand’s manufacturing sector. The survey showed an expansion in February, which is a positive sign counter to last week’s quarterly manufacturing sales data and brightens the outlook for the industry. Kiwi pairs broadly rallied around this release, which also coincides with reports from China of tax cuts and changes to foreign investment law proposals that could be stimulative to the economy on Friday.
Finally and most importantly, in non-market related news, there was a terror attack at New Zealand mosques on Friday. Our thoughts go out to the victims of this horrendous event.