NZD Weekly Review (May 27 -31)

Rising geopolitical tensions, budget hackings, and weak economic sentiment had traders turn sour on the Kiwi after an early positive start.

New Zealand Headlines and Economic data

Tuesday:

• New Zealand Treasury says ‘deliberately hacked’ after budget details leak
• Government concedes some of National’s Budget 2019 details correct

Wednesday:

• New Zealand Financial Stability Report May 2019
• NZ government blames hackers as budget leaked to opposition
• RBNZ Governor Orr says ‘open-minded’ on proposed bank capital requirements
• NZ central bank says current mortgage curbs appropriate, risks remain elevated
• Headline NZ business confidence (up 6 to net -32%) in May versus a previous read of -37.5%
• Broad Kiwi weakness during the European trading session, likely on the combination of weak New Zealand sentiment updates, global risk aversion rising on negative developments on the U.S.-China trade front, and possibly on weakness in the Aussie as multiple future rate cuts from the RBA is being debated in the market.

Thursday:

• New Zealand’s 1st ‘well-being budget’ targets mental health
• What’s in Budget 2019: Benefits to increase, most school donations scrapped, $2b for mental health
• New Zealand building consents fall -7.9% m/m
• China says US trade provocations are ‘naked economic terrorism’
• China makes next move in trade war, reportedly halting US soy purchases – more negative U.S.-China trade developments sparks further global risk aversion behavior, and likely the catalyst for the broad weakness in Kiwi pairs during the London & U.S. session.

Friday:

• Trump Says U.S. Will Hit Mexico With 5% Tariffs on All Goods – This surprise event from the U.S. sparked global risk aversion sentiment as it comes just a few hours after the U.S. administration submits its already agreed trade deal with Canada and Mexico to Congress for approval. Changing the terms on a whim is likely read by the global community that trade deals with the U.S. aren’t something to be relied upon, and this is arguably further de-motivation for China to lock up a deal with the U.S. quickly, hence the risk-off behavior and yen rally. This hit the U.S. dollar pretty hard on the session as it all potentially leads up to Fed rate cuts, and a weak Greenback is likely why we saw the Kiwi rally during the morning U.S. session.