Next week looks to be like a similar scenario for the Kiwi Dollar, but with the addition of risks from home. New Zealand’s fourth quarter GDP is due on Wednesday. Growth is expected to increase to 3.1% y/y from 2.7% in the third quarter. Such an outcome would mean the fastest pace of expansion since 2016. The RBNZ seems to have high hopes for this when it mentioned that growth was expected to strengthen going forward.
But before this data crosses the wires, we will receive the US CPI report on Tuesday. The headline rate is expected to tick up to 2.2% y/y from 2.1%. The core rate on the other hand is expected to remain unchanged at 1.8%. If a surprise to the upside further firms Fed rate hike bets, the New Zealand Dollar’s appeal could be undermined as it becomes more evident that it will lose its yield advantage to the greenback.
Outside of economic data releases, Kiwi Dollar traders should keep an eye out for news that are related to Mr. Trump’s tariff proposals. Actions ranging from countries retaliating to the possibility of more being exempt could stoke in the sentiment-linked unit.