The euro is set to make moves in the upcoming session or two as the ECB gives its latest monetary policy statement very soon. Will this add momentum to the strong EUR/NZD move?
Intermarket Snapshot
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Fresh Market Headlines & Economic data:
- Job growth screeches to a near halt in May, with private payrolls up just 27,000
- ISM non-manufacturing hits 56.9 in May vs. 55.5 estimate
- Fed’s Kaplan says too soon to support interest-rate cuts
- Growth in China’s services sector eases in May on slower export sales: Caixin PMI
- UK Service sector business activity picks up in May to 51.0 vs. 50.4 previous
- May Final Eurozone Services Business Activity Index: 52.9 vs. 52.8 in April
- Industrial producer prices down by 0.3% in euro area
- Australia’s economy slows to levels last seen during the GFC
- Australian services PMI jumped 6 points in May to 52.5
- NZ dollar rises on RBNZ official’s speech notes, Fed comments
- Nikkei Japan Services PMI comes in at 51.7 in May vs. 51.8 in April
Upcoming Potential Catalysts on the Forex Calendar:
- Fed Beige Book at 7:00 pm GMT
- Australia trade balance at 2:30 am GMT (June 6)
- Bank of Japan Governor Kuroda speaks (tentative)
- German factory orders at 7:00 am GMT (June 6)
- Euro area GDP at 10:00 am GMT (June 6)
- BOE Carney speaks in Tokyo at 10:00 am GMT (June 6)
- ECB monetary policy statement at 12:45 pm GMT (June 6)
- ECB press conference at 1:30 pm GMT (June 6)
- U.S. trade balance & unemployment claims at 1:30 pm GMT (June 6)
- Canada trade balance at 1:30 pm GMT (June 6)
What to Watch: EUR/NZD
It’s going to be a busy economic calendar for the Thursday session, and the highlight of the bunch is likely the European Central Bank’s latest monetary policy decision. And given the steep fall in inflation conditions over the last month, the pressure is likely on the ECB to bring in or hint at further stimulative measures in the upcoming meeting. This is likely the reason for the generally bearish lean on euro recently, and if the ECB falls inline with that narrative, then pressure could remain on the euro for now.
We’ll pair up this story with the Kiwi, which saw a recent round of bullish sentiment thanks to bullish comments from Reserve Bank of New Zealand assistant governor Christian Hawkesby, stating that “interest rates will remain broadly around current levels for the foreseeable future.” Will this bullish momentum carry on into the rest of the week? Of course we can’t say, but out of all of the major currencies, the Kiwi seems to have uniform bullish movement at the moment.
So, EUR/NZD is on our watchlist with it’s recent drop lower and the potential for the ECB event to keep the train going. The bearish bet is the higher probability situation at the moment, but the market has already fallen more than its daily ATR of around 80 – 90 pips on the session, and the 1.6900 – 1.6950 area is a previous area of interest that saw resistance and consolidation patterns in April and May. Might be a good idea to wait for a bounce for a better price to short, or at the very least consider a scale-in entry strategy for now.
For the bulls, it’s looking kind of tough to make a long argument at the moment, but if we see some combination of the global trade situation worsening, a fresh RBNZ official statement releases that conflicts Christian Hawkesby, or the ECB being less dovish than expected, then it would make sense to possibly buy around the 1.6900 – 1.6950 for a potential short-term, counter trend trade.
