Tons of potential top tier catalysts coming for NZD/JPY in the session or two, which makes this consolidation pattern on the one hour one to watch!
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Fresh Market Headlines & Economic data:
- U.S. industrial production edged down 0.1% in March after edging up 0.1% in February
- Unemployment across UK shows slight fall
- EU’s Tusk says ‘dream’ of Brexit U-turn not dead
- Several ECB policymakers doubt projected growth rebound: sources
- World economy, Brexit delay boost German investor morale in April
- Japan and U.S. hold ‘frank and good’ trade talks: economy minister
- Japan Tertiary Industry Activity index falls -0.6% to 106.6
- ANZ-Roy Morgan Australian Consumer Confidence up to 115.3
- Canada manufacturing sales edged down 0.2% in February following a 0.8% increase in January
- Foreign acquisitions of Canadian securities totalled $12.0B in Feb., following a significant investment of $28.6B in Jan.
- A tricky read? NZ central bank chief wrong-foots markets
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand CPI q/q at 11:45 pm GMT
- Japan trade balance at 12:50 am GMT (Apr. 17)
- China GDP & industrial production at 3:00 am GMT (Apr. 17)
- China industrial production & unemployment rate at 3:00 am GMT (Apr. 17)
- U.K. CPI & PPI at 9:30 am GMT (Apr. 17)
What to Watch: NZD/JPY
Volatility continues to be contained this week, but the action might pick up for the Kiwi with the quarterly consumer inflation report coming in the Wednesday Asia trading session. Expectations are pretty mixed for this event with the yearly read expected to tick lower to 1.7% from 1.9% previous, but the quarterly number to tick slightly higher to 0.3% from 0.1% previous. So, it could go either way, which makes a consolidation breakout setup the one to look out for.
We’ve also got a slew of Chinese economic updates as well coming during the Asia session, which could potentially influence the Kiwi as well given their close regional trading relationship. And finally, Japan is releasing its trade balance data and while it’s not expected to move markets, there is a possibility for it to be a volatility contributor.
With so many potential volatility catalysts, it makes sense to check out NZD/JPY, not only from a fundamental perspective but also from a price action point of view. On the one hour chart above, we can see the pair formed a descending triangle but faked out classical chartists with an upside break thanks to better-than-expected Chinese data sparking global risk-on behavior last Friday. Since then, the pair topped out just under the 76.00 and is now forming a mini descending channel pattern.
So for the bulls, be on the lookout for an upside break on positive NZ and Chinese data. That combination could get the pair as high as the March resistance area around 76.50 – 76.80 within the next few sessions. For the bears, an NZ CPI miss and/or below expectations Chinese data should easily bring the pair down to the major support area around 75.00, given that the daily ATR is around 60 – 70 pips. Again, with so many potential scenarios, it’s probably best to keep a close eye and your risk low with NZD/JPY over the next session or two.