With a lack of major catalysts from New Zealand, the Kiwi had a relatively quiet, choppy week. It’s movements were mainly tied with counter currency and global risk sentiment flows, but ultimately couldn’t create a uniform directional bias in the New Zealand dollar.
New Zealand Headlines and Economic data
- With no catalysts from NZ, it’s likely the move lower in Kiwi pairs during the European trading session stemmed from weak global risk sentiment, likely a reaction to reports of China seeking to narrow its trade deal with the U.S. This set a negative tone for the upcoming meeting between the U.S. and China later in the week. It’s also possible that weakness in the Aussie off of weak construction sector sentiment data may have put pressure on the Kiwi as well.
- New Zealand Government’s $7.5b surplus is the biggest since 2008 GFC – this report may have been the catalyst for the Kiwi’s broad move higher during the Asia trading session. But the Kiwi did fall back during the U.S. trading session, likely on negative global risk sentiment after reports of the U.S. blacklisting more Chinese companies from trade, and possibly on reports of the White House looking to limit Chinese stocks within government pension funds. Another downtick in China’s services PMI number may have contributed to the Kiwi’s eventual weakness as well on the session.
- New Zealand food prices were flat overall at 0.0% in September 2019. After seasonal adjustment, they rose 0.3%
- The New Zealand dollar seemed to have bottomed out for the week during the Asia trading session, finding buyers on rising global risk sentiment after positive geopolitical news is reported. Most notable are the U.S.-China trade negotiation updates (White House denies report China’s Liu He plans to leave Washington early; U.S. Weighs Currency Pact With China as Part of Partial Deal) and the news of a potential pathway to a Brexit deal. The Kiwi moved higher against most pairs with exception to the British pound which was obviously rocketing higher on a 180 degree turn from extreme negative Brexit sentiment from just a day or two previous.
- New Zealand manufacturers still struggling
- A mixed ending for the New Zealand dollar on Friday as traders were likely balancing out the disappointing manufacturing data update from New Zealand against the risk global risk sentiment, which got another push higher off of more positive updates to U.S.-China trade negotiations (Trump says ‘good things’ are happening at China trade talks), and possibly on the news that the Fed is extending its overnight funding operations through January 2020, a move that supports bank reserves to make sure overnight rates don’t spike higher again to stay within a targeted range.