|Day's range||0.668 - 0.669|
|52-week range||0.6426 - 0.7211|
It’s another quiet day for the markets, leaving the Kiwi and Aussie Dollar on the back foot. Expectations are for more policy easing…
In Australia, traders will get a chance to react to quarterly consumer inflation data. Better-than-expected data will likely buy additional time for the RBA before it has to finally cut rates. Weak data will likely move up the expected rate cut. Quarterly CPI is expected to come in at 0.2%, down from the previously reported 0.5%. Trimmed Mean CPI is expected to come in at 0.4%, unchanged from the previous reading.
Based on the price action the last three sessions and the close at .6687, the direction of the NZD/USD is likely to be determined by trader reaction to the uptrending Gann angle at .6687.
Given the new CPI data, New Zealand economists are now predicting the Reserve Bank will cut its official cash rate from its present record low at 1.75 percent to 1.5 percent in May. Although traders are pricing in an RBA rate cut for later in the year, the employment report may have bought the central bank a little time. The AUD/USD price action suggests that traders may have increased bets the RBA will not rush to ease rates even though the broader economy has seemingly lost momentum.
With the major financial markets closed for the day, volumes will be on the lighter side. U.S housing data will be the only numbers for the Dollar to respond to.
February’s employment report was mixed and in this week’s Reserve Bank of Australia minutes, the central bank didn’t sound too excited about the upcoming report. In the minutes, the RBA said that an uptrend in the unemployment rate would open the door to a rate cut.
Based on yesterday’s close and the current price at .6725, the direction of the NZD/USD on Thursday is likely to be determined by trader reaction to the major Fibonacci level at .6725.
The Dollar’s on the back foot following stats out of China this morning. It may not last though if there’s a resolution to the trade war…
China data was skewed to the positive. Whilst failing to spur the equity markets, the EUR and the Aussie Dollar benefited.
Traders are now pricing in at least two rate cuts by the RBNZ this year. Capital Economics and Westpac are forecasting the central bank will cut official interest rates by 25 basis points when it next meets in early May.
Based on the early price action and the current price at .6756, the direction of the NZD/USD on Tuesday will be determined by trader reaction to the 50% level at .6767.
Consumer sentiment figures out of Germany and Eurozone and industrial production figures out of the U.S will be in focus later today.
The US-Sino trade concerns to end soon sets the market mood. Greenback rebounded losses on the backdrop of surprising NY April Empire State Manufacturing Index. GBP/USD steadies amid Brexit headlines.
It’s risk-on in the early hours, support the EUR while pinning back demand for the Greenback. Earnings results will be key later.
In other news out of Australia, Reserve Bank of Australia deputy governor Guy Debelle said “decent” economic growth over the next few months would be enough to prevent the bank from having to cut official rates. Dr. Debelle further added that the bank had enough firepower if required to lower official rates further, but the expectations was that it would be required.
In today’s Financial Stability Review, RBA policymakers focused heavily on highlighting the potential threats at home and abroad, while noting that at present there are no imminent dangers. This supports its decision to drop its tightening bias in favor of a neutral stance for the cash rate.
China trade figures ease some of the market jitters over the economy. The focus will now shift to earnings to support risk appetite throughout the day.
Due to the prolonged move down in terms of price and time, we have to be aware of a possible closing price reversal bottom. We’ve already seen a lower-low today so a higher close will indicate the selling is getting weaker, or the buying stronger.
A quiet day on the economic calendar will keep the Pound in focus. Will there be calls for a snap general election?
Much of the Aussie’s gains on Wednesday were triggered after the RBA Deputy Governor Guy Debelle sounded optimistic about the nation’s labor market and said that part of weakness in economic growth was temporary, led by the disruption to resource exports and the effect of the drought.
Today’s strength is being fueled by better news from Australia on the home financing front. Earlier today, a report showed that lending to owner-occupiers and investors rose in February, but there’s little agreement among economists about what that means for the health of the housing market. Nonetheless, Aussie Dollar traders are reading the number as a positive for the currency.
Based on Monday’s performance, the price action is likely to be influenced more by the movement in Treasury yields than the stock market. However, this will change if stock prices drop sharply. If this occurs then look for the Japanese Yen to rally because of safe-haven demand.
Brexit remains the headline topic for the broader markets. The EUR may have found support early in the week, but Draghi may address that tomorrow.