Liquidity returned fully this week and we saw interesting market movement of even better magnitude as compared to the previous week. I think most market participants were waiting for the NFP. The jobs data came in lower than what was expected, 156k. The unemployment rate increased by 0.1% from 4.6%. The revised NFP number from November was positive and an extra 40 000 jobs were actually created that month. This resulted in greenback strength. We saw the pound losing some ground amid comments made by mother May, the British prime Minister. Her comments suggested the likelihood of a hard brexit. The Japanese Yen on the other hand gained some strength during the day. It could possibly be due to financial flows as there weren’t any top tier economic data from Japan today.
New Zealand’s economic calendar was relatively light the previous week. We only had the Global Dairy Trade Auction on the 3rd of January. The change in the GDT price index continue to fall, with this week’s nudging down by 3.9%. This was a larger drop than what was expected and saw the GDT price index fall to $3 463/tonne.
Kiwi Crosses Summary
The Euro made some of its loses against the kiwi last week. This was due to the latest reports from the Euro zone whereby inflation is on the rise, confidence is up and economic activity was stronger than initially estimated. The ECB also paused its QE program for the previous week only. This resulted in the euro gaining some ground against the kiwi the last 3 days of the week
I had a trade plan on this pair last week which was primarily based on my technical analysis. It out not to work the way I had anticipated and this was due to the strong aussie fueled by positive data from Australia. Australia’s Trade Balance came in positive, way better than what was expected. December’s Exports were 7% higher than what was expected while imports were low, they didn’t increase from November. This resulted to a positive Trade Balance of +1243m. Aussie strength continued in that regard.
The Kiwi was the strongest last week.I think that market participants, mostly dollar bulls, anticipated more hawkishness from the FOMC minutes which were released midweek. The minutes suggested and somehow showed how the Fed is not sure about Trump’s ability to act on the promises he made through his campaign, that being tax cuts and spending. Most Fed officials the fiscal policy in their forecast. Again it could also be due to dollar taking profit before the NFP. We saw the dollar gaining ground thereafter.