It’s the RBNZ’s turn to potentially shake up the currency markets, making NZD/JPY the pair to watch on whether it’ll continue its strong downtrend or not this week.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12165.61 -0.99% FTSE: 7283.87 -1.31% S&P 500: 2895.08 -1.27% DJIA: 26120.11 -1.20% |
US 10-yr 2.464% -0.036 Bund 10-YR -0.35% -0.045 UK 10-YR: 1.168% -0.052 JPN 10-YR: -0.052% -0.013 |
Oil: 62.00 -2.52% Gold: 1270.80 -1.04% Bitcoin: 5874.04 +3.13% Etherium: 173.08 +0.45% |
Fresh Market Headlines & Economic data:
- Bitcoin Is Suddenly Nudging $6,000 As Ethereum Rockets–Here’s Why
- China confirms vice-premier Liu He will visit US for trade talks
- Fed’s Kaplan optimistic U.S., China will find ways to tackle trade issues
- German Factory Orders Rebound Less Than Forecast After Slump
- Reserve Bank interest rates: RBA leaves cash rate on hold at 1.5%
- Australian Construction falls at a steeper rate in April
- Australian retail sales weak, firms rate-cut case
- New Zealand two-year inflation expectations 2.01% for Q2: RBNZ
- Japan PMI rises to three-month high as declines in output and demand ease
Upcoming Potential Catalysts on the Forex Calendar:
- Japan composite & services PMI at 1:30 am GMT (May 8)
- Reserve Bank of New Zealand monetary policy update at 3:00 am GMT (May 8)
- Switzerland unemployment rate at 6:45 am GMT (May 8)
- German industrial production at 7:00 am GMT (May 8)
- U.K. Halifax house prices index at 8:30 am GMT (May 8)
- BoE’s Ransden speaks in London at 9:15 am GMT (May 8)
- China trade balance (tentative May 8)
What to Watch: NZD/JPY
NZD/JPY has been on a tear lower this past week, especially after the news of a potential setback in the U.S.-China trade negotiations on Monday put global markets in a sour mood to start the week. We saw the pair gap lower at the week’s open, and after a little bit of a bounce, the pair is solidly back in the downtrend and now testing the swing low around 72.80.
With broad global sentiment in a bad mood on risk, sticking with the downtrend lower makes sense, but we do have the RBNZ monetary policy meeting coming right around the corner. The markets seems to have been pricing in a 0.25% interest rate cut, but there’s still a possibility they could hold. Given that the Kiwi has already been pretty beaten up over the last month, it’s quite possible it could bounce regardless if the RBNZ holds or cuts. And if the market does jump, the gap between this week’s highs and the previous week support (73.50 -73.75) may possibly draw in sellers if the RBNZ’s rhetoric remains dovish.
If the market immediately sells on the news, then a break of the recent swing low around 72.80 will likely draw in some sellers, but the fall could be limited if traders are eyeing the 2018 lows around 72.50 as a potentially strong support area.