|Day's range||0.655 - 0.656|
|52-week range||0.6426 - 0.7437|
In the absence of any fresh economic news from the U.S. on Monday and the bank holiday in New Zealand, we’re not expecting much movement today. If there is volatility then it will likely be fueled by trader reaction to U.S. Treasury yields and demand for risky assets.
A lack of stats will have the markets focused on the Italian coalition government’s response to the EU Commission letter, British PM May also in action.
Based on last week’s close at .6591 and the upside momentum into the close, the direction of the NZD/USD this week is likely to be determined by trader reaction to the Fib level at .6611.
There are no major domestic reports out of Australia and New Zealand this week so the direction of the Aussie and Kiwi is likely to be driven by the movement in China’s stock market. Both currencies could continue their short-covering rallies if the major Chinese indices continue to strengthen. Another steep sell-off in the Chinese stock markets should lead to further weakness in the Aussie and Kiwi.
Based on Friday’s close at .6591, the direction of the NZD/USD on Monday is likely to be determined by trader reaction to the main Fibonacci level at .6595.
Consumer prices in New Zealand were up 0.9 percent on quarter in the third quarter of 2018, Statistics New Zealand said on Tuesday. That exceeded expectations for an increase of 0.7 percent and was up from 0.4 percent in the three months prior.
The direction of the NZD/USD the rest of the session on Friday is likely to be dictated by the direction of U.S. Treasury yields and U.S. equity prices. However, if U.S. stock markets recover from Thursday’s losses then look for the short-covering rally to continue. Another spike higher in U.S. Treasury yields and further weakness in the stock market will likely drag the New Zealand Dollar lower.
China sees its slowest growth since 2009 to rile the markets in the wake of a Thursday sell-off that came off the back of positive stats out of the U.S.
It’s all eyes on the Pound, with Brexit news and UK retail sales figures to provide direction through the day. Any progress on Brexit to be the key driver.
Strong U.S. economic data and hawkish Fed minutes should be bullish for Treasury yields which will make the U.S. Dollar a more attractive investment and put pressure on the Australian and New Zealand Dollars.
While we can expect some focus on the FOMC minutes, it’s all about the GBP and the EUR today, the EU Summit putting Brexit and Italy in focus.
Based on the early price action, the direction of the NZD/USD the rest of the day will be determined by trader reaction to .6595 and .6562. Basically, look for the upside bias to continue on a sustained move over .6595. A downside bias is likely to develop on a sustained move under .6562.
According to Statistics New Zealand, headline consumer price inflation (CPI) jumped by 0.9% in the three months to September, the largest quarterly increase since the first three months of 2017.
Risk appetite trickles back into the markets early on supporting the commodity currencies, while the Kiwi gets a boost from Q3 inflation numbers.
Brexit jitters hit the Pound, with Italy’s budget delivery to the EU later today weighing on the EUR, as risk aversion returns to the markets.
The risk off sentiment continued through the early part of the day, with better than expected trade data out of China doing little to settle the markets.
While the ECB monetary policy meeting minutes and Brexit will be eyed, U.S inflation figures could have a far greater influence this afternoon.
Having failed to clear immediate descending resistance-line, NZDUSD rests on 0.6460 support, breaking which it’s drop to 0.6420 can’t be denied. Should prices continue declining past-0.6420, the 61.8% FE level of 0.6390, followed by 2016 low around 0.6345, can please the Bears. On the contrary, uptick beyond 0.6490 TL may have to struggle with 0.6500 horizontal-barrier to aim for the 0.6540-45 and the 0.6570 resistances. However, pair’s rise after 0.6570 could find it hard to clear the 0.6590-0.6600 region, which if broken opens the door for its rally to 0.6630 & 0. ...
Traders will be watching the PPI data because it needs to justify the surge in Treasury yields. Lower than expected PPI could drive Treasury yields lower. This would give the AUD/USD and NZD/USD a strong boost.
Economic data out of Asia give the Aussie and Kiwi Dollars some respite early in the day, while geo-political risk remains the key area of focus.
Traders shouldn’t read too much into the developing short-covering rally. It’s not likely to lead to any major change in trend. It is more likely to alleviate some of the downside pressure while setting up another shorting opportunity.
The Dollar could be in for another move should geo-political risks linger and trade war chatter out of China provide little comfort.
The Australian and New Zealand Dollars are inching higher early Monday on short-covering after early session weakness. U.S. Treasury markets are also closed. Additionally, U.S. Federal Reserve Chairman Jerome Powell fanned the flames for higher interest rates when he reiterated the central bank’s plan for gradual rate hikes through year end and beyond.
China service sector activity picks up as the PBoC announces a 4th cut in the RRR, while the Greenback sees more upside early on.
While the benchmark 10-year Treasury yield hit its highest level since 2011 on Friday, the U.S. Dollar Index was struggling. Perhaps this indicates a decoupling by the dollar and Treasury yields. If the run up in Treasury yields begins to level off then we can expect to see a weaker U.S. Dollar this week.