Stronger expectations for an RBNZ cut and the uneasy mood ahead of Trump’s speech could combine forces to drag the Kiwi further south in this session.
Fresh Market Headlines & Economic Data:
- RBNZ inflation expectations downgraded from 1.86% to 1.80% q/q for Q4
- RBNZ Survey of Expectations: OCR mean forecast also downgraded
- RBNZ: Monetary conditions expected to remain easier than neutral
- Australia’s NAB business confidence index up from 0 to 2 in Oct
- Political riots in Hong Kong escalate in financial district
- Japanese preliminary machine tool orders down 37.4% y/y
Upcoming Potential Catalysts on the Forex Calendar:
- U.K. claimant count change and average earnings index at 9:30 am GMT
- German ZEW economic sentiment index at 10:00 am GMT
- Euro zone ZEW economic sentiment index at 10:00 am GMT
- FOMC member Clarida’s testimony at 10:30 am GMT
- U.S. President Trump’s trade speech at 5:00 pm GMT
What to Watch: EUR/NZD
The Kiwi got a fresh bearish catalyst in the Asian trading session during the release of the RBNZ Survey of Expectations, which featured downgraded OCR and inflation forecasts.
This report upped the odds of an actual interest rate cut for this week’s RBNZ decision, so it wouldn’t be surprising if London session traders started positioning by today.
The pair already bounced off the support at its rising channel and range earlier on but could still have some bullish momentum for another break higher. A move past the channel top, however, could see limited upside at the 1.7500 range resistance.
The economic schedule shows that the euro zone has ZEW Economic Sentiment figures up for release, and improvements are expected from Germany and the entire region. If that’s the case, the shared currency could enjoy a pop higher, especially with risk aversion creeping in ahead of Trump’s trade speech.
The short-term trend strength analysis based on moving averages reveals that EUR/NZD is safely in bullish territory for now. Looking at the average volatility over the past 30 days shows that the pair moves around 110 pips per day.
This suggests that a dip back to the channel support around 1.7350 could be a good long entry area, with a stop below the range bottom of 1.7325 or even the 1.7300 mark.