NZD Weekly Review (Dec. 9 – 13)

The New Zealand dollar closes the week as a net loser as the bulls weren’t able to maintain the late week rally sparked by top tier geopolitical catalysts from the U.S.-China trade story.

New Zealand Headlines and Economic data

Monday:

• New Zealand manufacturing sales improves to +0.9% q/q vs. -0.5% previous; manufacturing volumes fell 0.3% q/q
• Despite the positive economic news from New Zealand above, we saw some uniform weakness in Kiwi pairs to start the week, likely on a slight negative global risk sentiment tone after headlines from China that included:
  • China tells government offices to remove all foreign computer equipment
  • China’s exports fall again in Nov. as trade war continues to bite
  • Politicians lash out at U.S. interference in Hong Kong affairs

Tuesday:

• Global risk sentiment starts to improve for the week on speculation that the U.S. and China are planning to delay the December tariffs, correlating with bottoming out of the New Zealand dollar on Tuesday through Wednesday.

Wednesday:

• The Kiwi moves higher on the session, likely on a combination of news from the New Zealand  (government unveils $12B infrastructure boost), improving environment in the U.S.-China trade story, and possibly on dollar weakness after the FOMC meeting knocked the Greeback lower.

Thursday:

• Business NZ manufacturing index slips from 52.6 to 51.4 in November
• Big jump in positive global risk sentiment during the afternoon U.S. trading session to rally the Kiwi higher after Trump Signs off on China trade deal to avert December tariffs. The big Conservative Party win in the U.K. general elections likely brought in some risk-on sentiment as Brexit uncertainty  waned, but the Kiwi did fall big against Sterling on the event.

Friday:

• A little bit of pullback in global risk optimism (and the Kiwi) as details of the newly formed U.S.-China trade agreement were a little bit disappointing (only 50% of the $112B in tariffs would be rolled back and China agreed to buy $32B in additional agricultural goods over the next two years, conflicting with Trump’s claims of $50B in agricultural purchases. A nice bump higher off of the news for the yen, but not enough to take it out of the red against any of the major currencies.