The RBNZ kept rates on hold but sounded optimistic about a recovery while the BOE will be having its Monetary Policy Report hearings next.
How might GBP/NZD react?
Before I show you the chart, let’s look at the top headlines that dominated the past trading sessions:
- Fed head Powell: U.S. economy a long way from employment and inflation goals
- Powell: Asset purchases to continue until substantial progress is seen
- Powell: Rising Treasury yields “a statement of confidence on the part of markets that we will have a robust and ultimately complete recovery”
- Richmond manufacturing index unchanged at 14 vs. forecast at 16
- U.S. CB consumer confidence index up from 88.9 to 91.3 vs. 90.2 consensus
- BOC Gov. Macklem: Monetary stimulus needed for considerable period
- Australian construction work done fell 0.9% q/q vs. projected 1.1% gain
- Australia’s wage price index up by 0.6% vs. 0.3% forecast
- RBNZ kept rates on hold at 0.25% as expected
- RBNZ policymakers agree that prolonged stimulus is necessary until targets are met
- RBNZ Gov. Orr wants to retain all options for stimulus
Upcoming Potential Catalysts on the Economic Calendar:
- Swiss Credit Suisse Economic Expectations index at 9:00 am GMT
- BOE MPC member Haldane’s testimony at 12:00 pm GMT
- BOE Monetary Policy Report hearings start at 2:30 pm GMT
What to Watch: GBP/NZD
The Kiwi tossed and turned during the RBNZ statement and presser, but it seems that bulls are winning out.This might be enough to keep the Fib levels holding, as the pair completes its retest of a broken trend line and area of interest. The moving averages are attempting a bearish crossover to confirm that sellers are taking control.
In that case, GBP/NZD could slide back to the swing low around the 1.9150 minor psychological mark or lower. Of course this depends on how the BOE events unfold in the upcoming trading session.
MPC member Haldane has a speech coming up while a few other policymakers, including BOE Guv’nah Bailey, are due to talk about the central bank’s economic outlook before before Parliament’s Treasury Committee.
This could mean a lot of volatility for the pair and perhaps another chance for a larger pullback to the 61.8% Fib at the 1.9315 mark before heading further down.
Note that this pair moves roughly 120 pips around this time of the week, so make sure to take this into account when setting stops and targets!