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Kiwi Plunges on Trump Trade Policy Concerns

By:
James Hyerczyk
Updated: Apr 30, 2017, 07:25 UTC

The Kiwi also fell under pressure despite the rise in demand for risky assets. It tumbled to its lowest level of the year in reaction to concerns

Kiwi Plunges on Trump Trade Policy Concerns

The New Zealand Dollar also fell under pressure despite the rise in demand for risky assets. It tumbled to its lowest level of the year in reaction to concerns over the Trump Administration’s trade policy.

NZDUSD
Weekly NZD/USD

The NZD/USD ended the week at .6859, down 0.0168 or -2.40%.

New Zealand Dollar traders reacted negatively to the news that the U.S. had announced plans to impose tariffs on Canadian exports of softwood lumber. Kiwi traders felt that it was just a matter of time before the U.S. would implement similar action against New Zealand. They were especially concerned about the U.S. moving on the New Zealand dairy market. The price action suggests the market seems to be increasing its risk premium with regard to the U.S. government putting imports from New Zealand under review too.

U.S. Dollar Index
Weekly June U.S. Dollar Index

June U.S. Dollar Index

June U.S. Dollar Index futures had an unusual week. They gapped lower on Monday in response to the outcome of the French presidential election and then proceeded to trade sideways in reaction to a number of events affecting various currencies.

For the week, the Greenback fell against a basket of currencies by 0.98% to close at 99.880.

Last Wednesday, the Trump Administration released its long awaited tax reform plan. The news failed to generate much upside movement in the U.S. Dollar. The plan was deemed disappointing by investors because it lacked substance.

Also last week, the U.S. government did not shut down as negotiations went smoothly to prevent such an event. Additionally, U. S. Core Durable Goods came in below expectations at -0.2% and First Quarter Advance GDP was up 0.7%, but well below the 1.3% estimate and 2.1% previous read.

USDJPY
Weekly USD/JPY

USD/JPY

The Dollar/Yen opened the week sharply higher as the market’s most favored candidate progressed through to the second round of the French election process. This news fueled a significant unwinding of safe-haven trades.

The USD/JPY closed the week at 111.489, up 2.459 or +2.26%.

Later in the week, the Bank of Japan stood pat on interest rates at its monetary policy meeting. The BOJ also raised its economic assessment, increasing its GDP growth forecast for the country’s fiscal year, but it lowered its core CPI forecast slightly.

AUDUSD
Weekly AUD/USD

AUD/USD

Australian Dollar investors primarily ignored the substantial increase in demand for higher-yielding assets last week and chose to react to the country’s disappointing consumer inflation figures.

The AUD/USD finished the week at .7486, down 0.0057 or -0.75%.

Australia’s consumer price index rose 2.1 percent year-on-year in the first quarter of 2017, slightly lower than the forecast of 2.2 percent. The report was deemed disappointing by investors who promptly sold the AUD/USD because it was not strong enough for the Reserve Bank of Australia to consider raising interest rates in the near-term.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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