The New Zealand dollar was a net under performer this week thanks to a string of negative economic updates, coronavirus headlines, and commentary from government officials.
New Zealand Headlines and Economic data
On top of the negative updates from NZ, we also saw global risk-off sentiment thanks to rising coronavirus cases headlines (Beijing Locks Down Part of City After Virus Outbreak at Market) and weaker-than-expected Chinese data to likely put pressure on the Kiwi.
But global risk sentiment shifted back towards positive during the U.S. trading session to likely lift NZD higher after better-than-expected U.S. economic data (Empire State index shows stable conditions in June after two months of record declines) and an announcement from the Federal Reserve that they will start buying individual corporate bonds.
New Zealand consumer confidence down 7 points to 97.2 in Q2 2020 – this update correlated with the Kiwi’s turn lower during the Asia session, with added pressure likely coming from the risk aversion sentiment that picked up during the U.S. session. This was likely a reaction to Fed Chair Powell’s testimony that the Fed will not be aggressive with corporate bond buying and that the economy faces “significant uncertainty” on a recovery.
Risk sentiment flipped negative during the U.S. session, which likely sent the Kiwi lower, possibly a reaction to weaker-than-expected U.S. unemployment data and rising coronavirus cases headlines.
With no major catalysts from New Zealand, price action on Friday was a bit mixed up until the London / U.S. sessions, where we first saw a move higher against the majors with no apparent clear drivers. But risk-off sentiment picked up quickly, once again on coronavirus fears, this time off of news that Apple will close some stores again in states that are seeing a resurgence of Covid-19 cases.