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Kiwi jumps after positive Chinese data

NZD - New Zealand Dollar

The New Zealand Dollar opens 30 pips higher over the week after Chinese export and credit data drove a positive shift in risk sentiment. The risk on tone saw commodity currencies, including the Kiwi drastically shift gears and outperform the market alongside global equities and rates. Opening this morning at 0.6770 the Kiwi met some resistance around 0.6780 but still closed higher than last weeks open. The week itself was fairly tame for the New Zealand Dollar as the lack of news led to low volume trading throughout much of the week. The Kiwi traded primarily within a 50-pip range with the week’s high and low all being reached on the much more eventful Friday. There were some softer domestic indicators however that tempered the NZD’s rise with weak house sales, softer PMI and weaker electronic card transactions data all coming in below expectations.

The day ahead has little of note for the Kiwi but the Easter week does have some news to digest. The RBNZ kicks things off tomorrow with the release of their q/q CPI data. Moving forward, the RBA in Australia will also announce their all-important employment data on Thursday with European PMI and American retail sales closing out the week. Overall the short-term outlook for the Kiwi remains under-pressure with 0.6780 proving to be a hard level of resistance.

Key Movers

Commodity currencies led the way over the weekend with the Euro also posting some healthy gains. The impetus for the move upwards came from China again with strong Export and Credit data adding to healthy PMI data a few weeks ago. While the shift upwards is in no conclusive of a turn-around, the market indeed ran with the news and looks to see it as a potential inflection point in global sentiment. The Kiwi and Aussie were the best performers with the Aussie in particular, outperforming. The Euro also benefiting from the news, rising 0.4% to close around 1.13. Conversely, the Japanese Yen was the weakest of the majors closing just above 112 against the Greenback. The positive sentiment also worked its way into other financial markets with the S&P500 rising by 0.7% to be within 1% of its September high and US 10-year bonds also rising 7BPS.

The week ahead looks to be action packed with a number of releases across the globe. Monday and Tuesday look to be mostly benign with only the RBA’s meeting minutes to digest but Wednesday and Thursday appear to be a bit more exciting. Wednesday kicks off in New Zealand with the RBNZ looking to release their CPI data while China is set to announce GDP data. The UK is also scheduled to release CPI numbers on Wednesday and OPEC will meet as well. Canada closes out Wednesday with their CPI and trade balance data late in the session. Thursday, ramps it up another notch with crucial Australian employment data, European PMI and US retail sales all scheduled for release before the Easter Break.

Expected Ranges

NZD/AUD: 0.9396 - 0.9472 ▼

NZD/CAD: 0.8984 - 0.9053 ▼

NZD/EUR: 0.5957 - 0.6020 ▼

NZD/GBP: 0.5138 - 0.5201 ▼

NZD/USD: 0.6733 - 0.6801 ▼