The Kiwi took some hits as risk aversion returned on account of fresh trade tensions, but data from New Zealand remains mostly upbeat.
Fresh Market Headlines & Economic Data:
- New Zealand Global Dairy Trade auction yielded 0.5% dip in prices
- Australia AIG services index fell from 54.2 to 53.7
- New Zealand ANZ commodity prices up 4.3% vs. previous 1.2% increase
- Australian GDP at 0.4% vs. 0.5% expected in Q3 2019
- Chinese Caixin services PMI up from 51.1 to 53.5 vs. 51.2 forecast in Nov
- South Korean court upholds decision on Qualcomm
- U.S. President Trump: Trade deal with China might have to wait until 2020
- Kushner’s involvement in trade talks to hint at progress?
- Iraqi oil minister: Additional oil output cuts required, 1.2mbpd cut not enough
- API announced draw of 3.72M barrels in stockpiles
- Uighur Bill against Xinjang adds fresh tensions in trade talks
- Chinese capital investment growth at three-year low of 1.6%
Upcoming Potential Catalysts on the Forex Calendar:
- Spanish services PMI at 9:15 am GMT
- Italian services PMI at 9:30 am GMT
- French and German final services PMI also due next
- Euro zone final services PMI at 10:00 am GMT
- U.K. final services PMI at 10:30 am GMT
What to Watch: NZD/JPY
Traders seemed to be back to their extra jumpy selves, particularly when it comes to updates concerning trade talks between the U.S. and China. Earlier in the session, the Donald took a swipe at negotiations and said he’d rather wait until after the elections before finalizing a deal.
However, economic data from New Zealand has been noticeably upbeat as the ANZ commodity price index revealed an impressive 4.3% increase in prices after the earlier 1.2% uptick. Keep in mind that previously released figures have also surpassed expectations, dousing hopes of an RBNZ cut soon.
A return in risk-taking as trade jitters subside could once again benefit the higher-yielding Kiwi and drag the yen lower as it has done so in previous weeks.
The pair is trending higher on its 1-hour time frame and inching closer to testing a rising trend line support. This happens to line up with the 61.8% Fib level and the 100 SMA dynamic support around 70.50.
The pair is still trending higher as confirmed by moving averages, but a lot could hinge on how risk appetite turns out over the next few hours.
A long play around 70.50 could work with a stop of roughly 60 pips, which is above NZD/JPY’s average daily volatility, could provide enough leeway.