-Graeme Wheeler, RBNZ Governor
Amid a lack of fundamental news the Kiwi trades higher versus the greenback, tracking back some of the last week's lost gains following the labour market report from the United States. The NZD/USD pair climbed 0.31% to 0.8517 and this week's outlook is bullish.
While 60% of Dukascopy traders were holding short positions on the pair, long-term technicals are pointing at pair's appreciation, while slight majority of all pending orders are placed to buy the pair, meaning traders are preparing for another rally. The New Zealand Dollar benefitted from stronger-than-expected Chinese trade balance, as $35.92 billion surplus, the highest in five years, will help to cushion the world's second largest economy from its slowdown.
However, this week's main catalyst for the Kiwi will be central bank's meeting. A sharp drop in commodity price index, falling business confidence, risks of the housing bubble and net migration, all have put the central bank into an increasingly tight spot. Economist were betting for two more rate hikes over the next three meetings, and even though the central bank can stay pat on the monetary policy, everything will depend on the language Graeme Wheeler will employ. However, a recent drop in Kiwi supports the case for the rate hike, bringing the official cash rate to 3.25%.
© Dukascopy Bank SA