To a large extent the New Zealand Dollar’s movement was dictated by geopolitical issues this week. With a relatively small domestic data docket the ‘Kiwi’ (NZD) went the way of many emerging market currencies as investors trended towards risk aversion.
The ‘Kiwi’ did see a tremendous gain against the Pound after a set of shocking UK labour market results and a dovish Bank of England inflation report. However this was not unique to the New Zealand Dollar as all of Sterling’s major peers strengthened.
In terms of domestic data there was very little to influence movement for the Antipodean currency. A slight drop in the Business Performance of Manufacturing Index was overshadowed by a better-than-anticipated Retail Sales Ex Inflation report, which showed to have exceeded forecast expectation having risen to 1.2% from 0.8%. This had very little influence at the time, however, as geopolitical tensions outweighed domestic data gains.
The ‘Kiwi’ was boosted on Thursday in response to negative US employment data. Continuing Claims rose to 2,544,000 from 2,519,000 despite being forecast to decrease to 2, 500,000. Also Initial Jobless Claims saw an unhealthy gain from 290,000 to 311,000.
Forecast for the New Zealand Dollar Exchange Rate
With only one domestic data release of any significance, movement for the ‘Kiwi’ is likely to be dictated by a combination of geopolitical change, the performance of the ‘Aussie’ (AUD) and the performance of the US Dollar.
Wednesday’s interest rate decision is very likely to impact upon New Zealand Dollar movement. It is forecast to rise from 3.5% to 3.75%. Should it meet or exceed the forecast figure increased demand for the ‘Kiwi’ is a strong likelihood.
With geopolitical situations already beginning to be less dominant, in terms of trader focus, it is likely that demand for the New Zealand Dollar will increase. Russian President Vladimir Putin has said that Russia’s goal was ‘to stop bloodshed in Ukraine as soon as possible’.
In terms of US data there are several releases which may affect the ‘Kiwi’. Thursday’s initial jobless claims and continuing claims reports may be of some importance, especially as the US will be hoping to rectify the losses posted in the previous week. Wednesday’s Fed minutes are also likely to be influential. Friday’s Markit Manufacturing PMI should affect the New Zealand Dollar; it is forecast to drop fractionally from 55.8 to 55.3.
Similarly to New Zealand, Australia has very little by way of domestic data releases to gauge movement. Akin to the ‘Kiwi’ expect the ‘Aussie’ to surge if geopolitical issues thin out. Tuesday’s Reserve Bank of Australia (RBA) meeting minutes should spark movement as well as RBA’s Governor Glenn Stevens’ speech.
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