Today’s weaker-than-expected Australian data releases got me looking at AUD/NZD’s downtrend on the 1-hour chart. What do you think?
Currency Snapshot:
Fresh Market Headlines & Economic Data:
- Trump says trade talks with China going “very well”
- Crude oil spikes on drop in inventories ahead of OPEC meeting
- RBNZ’s capital requirements and deadline are softer than markets had expected
- RBNZ’s Orr: We’re in a “hold phase” in monetary policy
- BOJ’s Harada calls for continuing current easing
- Australian retail sales flatline in October as shoppers close wallets
- Australia’s trade surplus drops by a third to $4.5B
- Japan manufacturers turn less pessimistic, service sector mood brightens
- Asia stocks mostly higher amid trade confusion
Upcoming Potential Catalysts on the Forex Calendar:
- Germany’s factory orders at 7:00 am GMT
- Euro Zone’s retail sales at 10:00 am GMT
- Euro Zone’s revised GDP at 10:00 am GMT
- Euro Zone’s final employment change at 10:00 am GMT
- Challenger job cuts at 12:30 pm GMT
- U.S. trade balance at 1:30 pm GMT
- U.S. initial jobless claims at 1:30 pm GMT
- Canada’s trade balance at 1:30 pm GMT
What to Watch: AUD/NZD
Earlier today Australia’s October retail sales clocked in at 0.0% when markets had seen a 0.3% growth. The trade balance report didn’t help much, either, as it showed Australia’s surplus shrinking to its smallest in TEN months as exports dropped by 5% while imports hit record highs.
Meanwhile, a capital review printed by the Reserve Bank of New Zealand (RBNZ) turned out to be more lenient than markets had expected.
Instead of getting $20B in new capital from equities, for example, banks can opt to get just $11B from equities and get the remaining $9B from preferred shares. Banks are also required to get the $20B in seven years, lower than the initially proposed 5 years.
And as if that wasn’t enough to attract NZD bulls, RBNZ head honcho Adrian Orr also shared that his team is on a “hold phase” right now.
Today’s events turned my focus on AUD/NZD, which is seeing a slow and steady downtrend on the 1-hour time frame. Heck, even MarketMilk is pointing to a bearish trend!
A retest of the 100 SMA near the descending trend line could make for a good trade especially if AUD/NZD makes new December lows after a retest. Cautious optimism over a U.S.-China trade deal just might push AUD back to the trend line.
If you’re not sure how big a stop you should put on your AUD/NZD trades, know that the pair moves by about 50 pips or so on Thursdays and 30 under 40 pips on Fridays.
