The yen was the top performer this week while the New Zealand dollar lagged.
weekly FX performance
The New Zealand dollar was caught in the risk rout yesterday but the bigger drivers were fundamental and technical.
The fundamental driver was the New Zealand Q2 CPI report. Prices rose just 1.6% y/y compared to 1.8% expected and could throw a wrench into plans for the RBNZ to hike rates.
The RBNZ meeting is July 23 and the implied probability of a hike in the OIS market has fallen to 82% from a near-certainty. If Wheeler decides to leave rates at 3.50% a second wave of selling will the kiwi.
Technically, NZD/JPY is flirting with some key trendlines after failing at the April highs.
NZD/JPY weekly
The other (early) sign of a kiwi reversal is in NZD/USD as it threatens a double top after failing ahead of the 2011 high.
NZD/USD weekly
I think picking tops is a terrible habit but if the fundamentals line up with the technicals and if the RBNZ heads to the sidelines there’s a chance of a swift fall in these charts.
