Continued Brexit drama definitely puts Sterling on today’s watchlist, paired up with the Kiwi as New Zealand economic data is right around the corner.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 11959.82 -1.72% FTSE: 7211.49 -1.67% S&P 500: 2822.97 -1.17% DJIA: 25444.75 -1.29% |
US 10-yr 2.329% -0.064 Bund 10-YR -0.117% -0.038 UK 10-YR: 0.953% -0.063 JPN 10-YR: -0.063% -0.028 |
Oil: 58.02 -5.54% Gold: 1283.80 +0.75% Bitcoin: 7719.96 +0.10% Etherium: 243.12 -1.18% |
Fresh Market Headlines & Economic data:
- U.S. New-Home Sales Drop From 11-Year High as Prices Increase
- Flash U.S. Manufacturing PMI at 50.6 (52.6 in April). 116-month low
- Theresa May is expected to resign after losing the support of her Cabinet
- Flash Eurozone Manufacturing PMI at 47.7 (47.9 in April). 2-month low
- ECB minutes show declining confidence in growth recovery
- Drop in German business morale points to meager growth
- Canadian wholesale sales rose for the fourth consecutive month, up 1.4% to $64.1 billion in March
- Oil plunges 4% on weak economic data and moderating Iran tension
- Flash Japan Manufacturing PMI falls to 49.6 in May, from 50.2 in April
Upcoming Potential Catalysts on the Forex Calendar:
- Fed’s Kaplan, Barkin, Bostic & Daly speak in Dallas at 6:00 pm GMT
- New Zealand trade blance at 11:45 pm GMT
- Japan core CPI at 12:30 am GMT (May 24)
- Japan all industries activity at 5:30 am GMT (May 24)
- U.K. retail sales at 9:30 am GMT (May 24)
- U.S. durable goods orders at 1:30 pm GMT (May 24)
What to Watch: GBP/NZD
Along with the aforementioned Brexit drama and New Zealand trade data ahead, the U.K. is going to hit traders with the latest retail sales data in the upcoming Friday London session. So there are more than enough potential catalysts coming up for GBP/NZD, and the pair has been forming a classic descending triangle that could be ready to breakout with the upcoming news.
For the bears, the trend is your friend on this one and this pattern typically draws in more sellers, especially if the fundamental catalysts line up. If the market can sustain below that 1.9450 area, while U.K. retail sales data disappoints and NZ trade data surprises positive, this becomes a high probability situation for the shorts that could hit the daily ATR range of around 140 – 150 pips before the end of the week.
For the bulls, with no sight of a Brexit deal likely already priced into Sterling, it might not take much for this pair to break the falling ‘highs’ pattern. End of week profit taking on short positions, fresh news of the U.K. government and parliament working towards a deal, and/or a better-than-expected U.K. retail sales update might do the trick. But since an upside countertrend break might not yield a strong move unless there is a big surprise, it’s probably a good idea to take profits quickly if this scenario plays out.