Week In FX Asia – Kiwi On Steroids

The Kiwi is ending the week on a high note, receiving solid support from improving risk market appetite. Gains on the week have been impressive (+1.7%, w/w) as the topside remains in favor with traders. Also aiding the currency’s flight has been the bullish comments from RBNZ earlier this week. Currently and along with the AUD, the NZD is very much in vogue ($0.8665).

Earlier in the week good solid data led the Kiwi charge higher. New Zealand reported a stellar trade surplus number for February (+$818m, m/m and +$649m for the year ended in February). It was the widest surplus in three years.

Governor Wheeler and his fellow policy makers at the RBNZ continue to communicate their tightening bias. This month the central bank lifted the Official Cash Rate by +25bps to +2.75% and is widely expected to keep raising rates over the remainder of the year. The futures market has priced the cash rate to be at +3.75% by year-end.

Despite being a currency on steroids there is a danger for a market correction. With many forex participants expecting the USD to eventually grind higher – because of a hawkish FED – many will focus on next weeks US jobs data for direction. A much stronger than anticipated NFP headline should give the dollar that much need support to outperform the G20 currencies, a headline close to expectations the market should see better levels to want to own the NZD.

WEEK AHEAD

* EUR Euro-Zone Consumer Price Index Estimate
* CAD Gross Domestic Product
* AUD Reserve Bank of Australia Rate Decision
* EUR German Unemployment
* USD ISM Manufacturing
* EUR European Central Bank Rate Decision
* USD ISM Non-Manufacturing Composite
* CAD Net Change in Employment
* CAD Unemployment Rate
* USD Change in Non-farm Payrolls

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell