After early gains, it was a knockout punch from the Reserve Bank of New Zealand to put Kiwi pairs down for the week. What did the RBNZ say?
New Zealand Headlines and Economic data
- Big improvement to New Zealand trade balance; +12M vs. previous -950M
- New Zealand Joins Dovish Shift as Governor Puts Rate Cut in Play
- NZ central bank flags rate cut as likely next move, kiwi tumbles
- Business confidence down again according to ANZ Business Outlook Survey
- New Zealand new dwellings consented rose 1.9% in February, after rising 13.6% (revised) in January 2019
Major Market Drivers for the New Zealand
As mentioned above, New Zealand pairs were off to a good start at the beginning of the week, possibly trading higher with the Aussie off of positive comments from RBA Assistant Governor Ellis on Australia’s labor market. But it wasn’t meant to last as one the most anticipated events of the week for forex came and demolished Kiwi bulls in one fell swoop: the Reserve Bank of New Zealand’s (RBNZ) monetary policy statement.
In short, the RBNZ shifted their bias from surprisingly optimistic back in February to dovish in their latest statement. They cited weaker spending and slowing global as the reason for the shift. And while they held the OCR at 1.75%, they did open up to the possibility of a rate cut of 25 basis-points, possibly as early as August. Some analysts are speculating that we may even see another cut by the end of 2019. Obviously, Kiwi bears jump in on this news, sending Kiwi pairs lower by at least over one percent against the rest of the majors.
After the RBNZ event, Kiwi pairs lacked any further significant catalysts from New Zealand. The business confidence update from ANZ failed to spark a sustained bearish reaction and RBNZ Governor Orr speech was a dud. So, price action in Kiwi pairs were subject to counter currency influences, leading to a mixed, but mostly negative close at the end of the week.