Deteriorating fundamentals dragged on the New Zealand Dollar last week as the unemployment rate spiked to its highest level since 2003, and may face further headwinds over the coming week as further economic news continues to reflect a dour outlook for the NZ economy. In addition, interest rate expectations could also stoke increased selling pressures for the high-yielding currency as we expect the Reserve Bank of New Zealand to aggressively cut borrowing costs well into the next year.

Moreover, as New Zealand slipped into a recession during the first half of the year, the economic data scheduled for this week will certainly provide a clearer picture as to what to expect from the RBNZ, and is likely to spark volatility for the Kiwi. A recovery in producer prices paired with a decline in retail spending would only strengthen the argument for the central bank to increase their efforts and add weight for the push to lower interest rates.

Overall, the Kiwi will remain as volatile as ever with the usual push and pull factors added to by carry trade movements, thus creating opportunities for buyers & sellers alike.