A very light calendar to start the week, but we do have low-to-mid tier events from New Zealand and Japan to potentially add some life to the Fibonacci resistance pattern forming on NZD/JPY.
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 12268.62 -0.58%
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S&P 500: 2953.59 +0.11%
DJIA: 26780.50 +0.23%
|US 10-yr 2.037% -0.029
Bund 10-YR -0.299% -0.017
UK 10-YR: 0.827% -0.017
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|Oil: 53.54 -0.67%
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Fresh Market Headlines & Economic data:
- RBA’s Lowe Sees Weaker Boost to Growth If ‘Everyone Is Easing’
- New Zealand credit card spending rose 6.6% y/y in May vs. 4.5% in June
- Turkey’s lira jumps on opposition win in Istanbul vote, emerging FX steady
- Oil extends gains on US-Iran tensions
- Iran faces new U.S. sanctions, says it could shoot down another drone as standoff with Trump admin. deepens
- Bitcoin tests 15-month highs after 10% weekend jump
- U.S. cyber attacks on Iranian targets not successful, Iran minister says
- The Conference Board Leading Economic Index for China increased 0.8% in May 2019 to 148.8
- Trump says the Fed ‘blew it’ by not cutting rates
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand trade balance at 11:45 pm GMT
- Japan Monetary policy meeting minutes at 12:50 am GMT (June 25)
- Japan services producer prices & BOJ core CPI at 12:50 am GMT (June 25)
- RBA’s Bullock speaks in Berlin at 8:05 am GMT (June 25)
- ECB’s Guindos speaks in Rome at 8:15 am GMT (June 25)
- Canadian wholesale sales at 1:30 pm GMT (June 25)
What to Watch: NZD/JPY
Despite the lack of top tier catalysts on the schedule to look forward to, we do see some potential movement in NZD/JPY with the latest trade balance data from New Zealand, and the latest inflation update and BOJ thoughts on monetary policy coming from Japan. None of these events are usually market movers, but what makes the pair remotely interesting is the chart pattern on the one hour timeframe.
The pair is in a longer-term downtrend since March when it topped out around 76.50, but recently buyers have held their own just above the major psychological level of 70.00 to push the market back up to the 71.00 handle. The bears have taken their stand there, which also happens to be the 38% Fibonacci retracement level of the latest swing move from 72.27 down to 70.27, and with stochastics falling after that area has held for a third time this month, the odds are looking better-than-even we could see a move lower.
So if you’re a bear, then this area up to the 61% Fib retracement level is great area to nibble into a short position to play a longer-term trend lower. And if New Zealand’s trade balance disappoints while Japan’s inflation data shows a faster-than-expected rise, momentum could form to the downside, especially if global risk sentiment shifts negative.
If you’re a bull, you might not see a legit upside breakout of the Fib area even if New Zealand trade data is positive (low probability) or Japan’s inflation drops. But if the geopolitical risks (e.g., U.S.-Iran tensions, U.S.-China trade war, G-20 expectations, etc.) improve as the week goes on and the RBNZ statement on Wednesday does not signal near term rate cuts, it is possible for NZD/JPY to make that break for a short-term counter trend rally. Gotta stay on your toes if you’re looking for a long position because the market could return back to the trend at any time!