It was a mixed week for the New Zealand dollar, but ultimately ended up as a net loser at the Friday close. With very little catalysts from New Zealand, it’s highly likely the pressure from the negative global risk sentiment environment was the main driver for the Kiwi to be in the red against most of the major currencies.
New Zealand Headlines and Economic data
- New Zealand’s merchandise (goods) terms of trade rose 2.6% q/q; Services terms of trade rose 0.5% q/q
- After a red open at the beginning of the week, we saw a round of positive global risk sentiment during the Asia session, likely on news of the Bank of Japan pledging support sparking speculation of coordinated global policy action to combat the coronavirus.
- Global dairy prices are down -1.2% since the last auction on Feb. 18. This was not the catalyst for the somewhat broad spike higher in the Kiwi during the U.S. trading session, but on U.S. dollar weakness after the Federal Reserve came out with a surprise cut to the Federal Funds rate range by 50 basis points.
- New Zealand commodity price index down 2.1% in February
- Kiwi bears take back control big time during the Thursday trading session, likely on negative global risk sentiment as Coronavirus fears spiked higher, especially after California declared state of emergency over coronavirus.
- The Kiwi saw gains early in the Friday session, once again likely on U.S. dollar weakness as U.S. Treasury yields plumb new depths, but we see the bears take control mid session on more negative Coronavirus news of more than 100,000 infections worldwide and Coronavirus deaths rise to more than 3,300 worldwide.