The script flips on the New Zealand dollar as it went from a big winner last week to a big net loser this week!
The news and data from New Zealand were mixed this week, so it’s likely the price action was mainly driven by global risk sentiment and counter currency flows.
New Zealand Headlines and Economic data
A broad move lower in the Kiwi during the London session, possibly off of weaker-than-expected European trade data (e.g., German Exports in April 2020: -31.1% on April 2019) or geopolitical tensions (North Korea cuts communications with South Korea, Pompeo demands Iran release US detainees, urges Libya ceasefire)? But during the U.S. session the Kiwi turned higher a bit, possibly on rising risk-on sentiment after the WHO’s makes a U-turn on asymptomatic transmission.
The New Zealand dollar tops out for the week during this session, slowing shifting lower during Asia and London trade before picking up speed after a dovish outlook on the economy from the Federal Reserve.
Kiwi weakness continued into the Thursday session off of the FOMC event. Negative global risk sentiment accelerated during the U.S. session, likely on fears of a second wave (Florida Reports Highest Daily Increase in Coronavirus Cases Since Outbreak Began) are added on top of the Fed’s dismal outlook to worry about.
Positive global risk sentiment recovers during the Asia and London trading sessions (possibly profit-taking?) to send NZD higher, but swings back to negative later to secure the Kiwi’s net loss for the week as fears continue to rise of a second wave and a re-implementation of lockdown protocols (CDC warns U.S. may reimplement strict coronavirus measures if cases go up ‘dramatically’).