Daily Economic Commentary: New Zealand

[PipDiddy]

Ouch! No thanks to another round of risk aversion, the Kiwi took a massive hit last Friday. NZD/USD closed the U.S. trading session at .7502, a decline of more than 100 pips from its opening price during the Asian session.

Earlier today, however, the Kiwi received a little "pick me up" from the better-than-expected results on its trade balance and NBNZ business confidence survey.

The trade balance showed that exports surged in October and helped the country's trade deficit to taper down to 316 million NZD, much lower than the 400 million deficit initially expected. Meanwhile, the NBNZ business confidence survey printed a reading of 33.2 for November, up the 23.7 reading seen the previous month.

Whether the Kiwi will be able to hold on to its gains or not will largely depend on how data from other major economies look like this week. Special mention goes to the NFP report from the U.S. on Friday, as it will ultimately determine whether risk aversion is here to stay!

[PipDiddy]

Welcome to the slide party, baby! The Kiwi joined the ranks of its comdoll brethren as it slid against the mighty Greenback. With risk aversion back in play and mixed economic data, NZD/USD had almost no choice but to fall 50 pips to a new monthly low at .7471.

As I had mentioned yesterday, the early release of the NBNZ business confidence survey provided the Kiwi with a bit of support when it printed a rise from 23.7 to 33.2 in November.

With consumer spending figures beginning to show signs of improvement, the pickup in confidence shouldn’t have come as a big surprise. The report showed that confidence improved across all sub-components, indicating that the business sector may be gaining a bit of momentum.

But what ended the bulls’ parade was a disappointing building consents report, together with risk aversion, of course. Results from last month showed a disheartening 2.0% decline following a weak 0.5% increase in September.

Since New Zealand won’t be publishing any more reports today, risk sentiment will probably continue to drive NZD/USD. That being the case, be sure to watch for any new developments in the euro zone as the European debt crisis continues to be the main market theme these days.

Good luck out there, kids!

[PipDiddy]

Another one bites the dust! With risk aversion well underway, the Kiwi ended up in the losers’ camp yesterday. NZD/USD didn’t rise much higher than its opening price of .7470, eventually ending about 30 pips lower for the day.

No reports from New Zealand yesterday. As usual, risk sentiment continued to be the driving force behind the Kiwi and the rest of the comdolls. Unfortunately, these “riskier” currencies don’t fare too well in times of risk aversion.

The lone release for today is the ANZ commodity price report, which measures the change in prices of New Zealand’s exports. Since exports contribute to GDP, higher prices tend to benefit New Zealand and the Kiwi. Even though this report will probably take a backseat to risk sentiment, it may still trigger a mini bull run if it prints an upside surprise. Catch it at 2:00 am GMT!

[PipDiddy]

Using the .7400 handle as a springboard, NZD/USD skyrocketed to an intraday high of .7512. It then inched down to close the day at .7494 with the com-doll bagging 57 pips!

Word on the street is that better-than-expected reports from Europe and China sparked risk appetite and sent growth-related currencies higher.

The commodity price report might have also helped the Kiwi pare its losses against the dollar when it showed that export prices increased by 4.5% in November. According to ANZ National Bank, the strong demand in Asia and Europe was the main reason why we saw a bigger uptick during the month than in October when the report only printed a 3.50% increase.

Our awesome economic calendar is blank for reports from New Zealand for the rest of the week. Boo!

But don’t worry! We have Australia’s trade balance and retail sales reports today which can help you with your Kiwi trades. Remember, the Aussie and Kiwi usually move alongside each other. Good luck!

[PipDiddy]

Yo Kiwi! Teach me how to dougie! With risk appetite back in fashion, the Kiwi was lookin’ fresh yesterday as it found itself walking up the charts with swagger. NZD/USD ended the day at 1.7545 with a solid 51-pip gain.

Risk sentiment improved yesterday in light of talks of the ECB’s bond buying. Of course, this resulted in a pip-party for the Kiwi and its comdoll brethren, currencies that tend to rally in times when risk appetite is healthy.

If you’re looking to trade New Zealand news, you’ll have to wait until next week because we ain’t gettin’ no reports today, son! But the U.S. is set to publish its hard-hitting nonfarm payroll report at 1:30 pm GMT, and we all know how that has rocked NZD/USD in the past!

[PipDiddy]

And with that, the Kiwi completed its comeback! Thanks to bad U.S. nonfarm payroll data, it was able to stage a strong rally, rising a total of 114 pips last Friday to end the week positive.

The rise in NZD/USD was because of USD weakness more than anything else though. New Zealand didn’t even publish any reports last Friday! And I hate to be the bearer of bad news, but the economic docket will be light this week as well.

The only noteworthy event is the RBNZ rate decision scheduled on Wednesday. Don’t be surprised if the central bank decides to hold the official cash rate at 2.00% again. After all, New Zealand’s recovery is still on shaky ground, and inflation expectations are falling.

Now, that being the case, you still ought to stay tuned when the RBNZ makes its announcement at 8:00 pm GMT on Wednesday. It’s also due to hold its press conference and monetary policy statement at this time, so we might get plenty of action even if interest rates stay unchanged.

[PipDiddy]

It didn’t take long for the Kiwi to slip from its opening price of .7652 and scream, “look down belooow!” NZD/USD hit rock-bottom at .7587 before ending the day a tad bit higher at .7618.

With the RBNZ, RBA, and BOC due to release their interest rate decisions this week, it’s not hard to imagine why traders stayed away from the com-dolls.

So you better make sure you keep tabs on what central bankers have to say! Note that the RBNZ will announce its decision tomorrow at 8:00 pm GMT. According to what my buddy Forex Gump wrote in his weekend blog, analysts are expecting rates to stay flat at 3.00%.

But don’t fret! If traders find RBNZ Governor Alan Bollard's speech hawkish enough, the Kiwi may be able to rally against the dollar.

The currency may also be able to pare its loss later when data on the country’s manufacturing activity comes out at 9:45 pm GMT. If you’re planning to go long on NZD/USD you may want to keep your fingers crossed for a figure higher than the 3.1% uptick we saw in June.

[PipDiddy]

After partying too hard on risk appetite booze earlier in the day, the Kiwi found itself with a hangover, puking pips all over the place. After testing weekly highs around .7650, NZD/USD bent over and coughed out almost 100 pips to end the day at .7578.

No biggies were released from New Zealand yesterday, but all that changes today, as our drinking buddies over at the RBNZ will be releasing the interest rate decision at 8:00 pm GMT. Rumors are that they will follow the RBA and BOC’s lead in pausing on any rate hikes and will be keeping the cash rate at 3.00%. Watch out though, for any drunken, dovish texts, as it may just send markets into a full-on bar room brawl!

[PipDiddy]

Make that three for three! Once again, the Kiwi dropped for the third consecutive day, as it suffered thanks to some dovish comments by Mr. Alan Bollard, as well as weak commodity trading. After opening at .7577, NZD/USD dropped more than 100 pips to close at .7461.

While it was expected that the RBNZ would keep rates steady at 3.00%, RBNZ officials did leave us with a rather dovish statement. The central bank lowered their growth forecasts for 2011, as it now predicts that economy will show GDP growth of just 1.7%, down from the initial projections of 2.8%.

Furthermore, the RBNZ expressed concern about consumer spending and the state of the housing market. This indicates that Bollard and other central bank officials feel that the New Zealand economy is still prone to weakness, which is why they have to be careful in hiking rates too soon. I guess this means we won't be seeing another rate hike any time soon!

It'll be interesting to see whether we see another drop in NZD/USD today. As I said, it has dropped every single day this week – is it time for a mid week reversal?

[PipDiddy]

After three straight days of decline, the Kiwi was finally able get its groove on and boom boom pow pips out of the dollar! NZD/USD closed the day 32 pips higher at .7493. Up top yo!

Economic gurus say that the stellar job report from Australia helped the Kiwi in yesterday’s trading. Of course, the better-than-expected terms of trade report for the third quarter was also a plus for the comdoll. It was reported that the prices of New Zealand’s internationally-traded goods and services were 3.0% higher during the third quarter and beat the consensus which was for a modest 1.7% increase.

As you probably know by now, a few market junkies are bracing for Chinese rate hike. So you may want to be careful in trading the Kiwi because if they’re right, the comdoll could end up in the bear lair!