The Kiwi Dollar opens the new week barely changed, still trading close to the 64 cent level and unable to break out of its recent range. Over the weekend we have seen the GBP and EUR both lose ground following weak manufacturing data, while the US Dollar itself was well supported after the release of positive PMI data and a better than expected consumer sentiment index reading. Uncertainty around the U.S – China trade stalemate continues to weigh on market risk appetite and is perhaps preventing any break of current trading ranges for the NZD.
The Week Ahead
Interest rate decisions and comments from various central bank officials have been the main focus over the past couple of weeks. Much has happened including a surprise “no cut” from the RBNZ, however currency movements have been contained and it appears a significant change in risk appetite or market sentiment is needed to shake things up again. The most likely factor to change things is significant progress in U.S – China trade negotiations. The week ahead has a mixture of local NZ data along with a flurry of U.S data later in the week mixed in with the Thanksgiving Day holiday on Thursday.
Will The NZD make a break away from the 0.6400 level?
The Kiwi Dollar still hasn’t made the significant gains many had expected after the RBNZ’s “no cut” decision earlier in the month, with the currency trading sideways around the 64 US cent level. Local economic results and business news continue to be relatively positive, including improving dairy prices, however this has not led to NZD buying. The week ahead has more local data including retail sales this morning, trade balance tomorrow, and the latest ANZ business confidence survey result on Thursday. Positive data or a vast improvement in global risk appetite will be needed to propel the NZD forward.
Trade Negotiations Drag On
U.S – China trade headlines continue to surface each day but with still no clear outcome. Once again President Trump has said that a deal is “very close”. He declined to confirm if he will sign a bill supporting Hong Kong’s protesters, which could add complications to the negotiations, saying “we have to stand with Hong Kong, but I’m also standing with President Xi”. As time goes by, markets are growing more sceptical that a Phase 1 deal will happen before the end of the year. In the meantime, both the NZD and AUD should benefit from any positive trade war news.
Busy U.S Data Week
An eventful week ahead for the U.S with a series of high impact data releases from Tuesday to Friday, mixed in with the Thanksgiving holiday on Thursday, and ‘Black Friday’ where many markets will be open for only half the day. The combination of important data and reduced holiday trading volumes could see some volatility later in the week. Data releases in the calendar include trade balance and consumer confidence tomorrow, while early Thursday morning sees a flurry of big announcements including US GDP, Durable Goods Orders, and PCE Core data. The US Dollar has also been trading in a fairly tight range and the big question is whether this weeks data can spark a break higher given recent results have been fairly positive, and the US Fed appears to be “on hold” with any interest rate adjustments.
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