Top tier economic updates are right around the corner for NZD/CAD, which seems to be back to retesting a major trendline. Will the bulls hold once again or will the breaks cut right through?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a potential NZD/USD range break, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
API Crude oil stock change at 8:30 pm GMT
Reserve Bank of New Zealand Monetary Policy Statement at 10:00 pm GMT
Japan Trade Balance, Machinery Orders at 11:50 pm GMT
Australia Leading Index at 1:00 am GMT (Aug. 18)
Australia Wage Price Index at 1:30 am GMT (Aug. 18)
U.K. Inflation Rates at 6:00 am GMT (Aug. 18)
Euro Area Inflation Rates at 9:00 am GMT (Aug. 18)
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What to Watch: NZD/CAD
Just when we thought NZD/CAD was about to break the range to the upside, the New Zealand government hits Kiwi bulls with news of a temporary lockdown to send NZD lower against the rest of the major currencies. That brought NZD/CAD back firmly into the control of the bears after the market broke below strong support around the 0.8770 handle.
It’s likely the market will consolidation for the next few hours as trader await the latest monetary policy decision from the Reserve Bank of New Zealand. We’ll get that event at 2:00 am GMT, and with New Zealand going back into lockdown, the expectations of what the RBNZ will say just got a whole lot hazier.
Will they still hike the official cash rate from 0.25% to 0.50%? Or will the see the need to keep easy money conditions going as the covid-19 pandemic continues to wreak havoc on the globe?
Whatever they decide, it’s likely to spark a strong move in NZD pairs in the short-term. And with the current trend favoring the bears in NZD/CAD, we’ll be on the lookout for short setup in a scenario where the RBNZ decides to hold the official cash rate at 0.25% (more rate hike bets likely come down) and the upcoming API crude oil inventory data shows a decrease in oil inventory. In that scenario, the area between 0.8770 – 0.8800 may draw in both technical and fundamental traders looking to sell.
If the RBNZ does hike and is pretty optimistic that the lockdown will be short-lived, the Kiwi could rally from current levels given that it’s already given back the speculative gains leading up to the event. NZD/CAD will likely find support down to the previous swing low around 0.8700 and bounce higher, especially if oil prices take a dip on the inventory data.