The RBNZ’s latest monetary policy decision is right around the corner and we’ve got another Fibonacci setup on NZD/CAD to potentially play any potential pickup in Kiwi volatility.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12244.18 -0.25% FTSE: 7418.58 +0.03% S&P 500: 2935.17 -0.35% DJIA: 26612.21 -0.43% |
US 10-yr 1.999% -0.029 Bund 10-YR -0.334% -0.025 UK 10-YR: 0.788% -0.028 JPN 10-YR: -0.143% +0.006 |
Oil: 58.20 +0.52% Gold: 1437.50 +1.36% Bitcoin: 11304.46 +3.04% Etherium: 310.57 +0.54% |
Fresh Market Headlines & Economic data:
- US consumer confidence falls to 121.5 in June, vs. 131.1 expected
- U.S. Home prices in April were 3.5% higher than a year earlier
- Philly Fed non-manufacturing index fell 16 points to 12.2 in June
- Canadian Wholesale sales increased 1.7% to $65.3 billion in April, the fifth consecutive monthly increase
- U.K. Retailers see fastest drop in sales since Financial Crisis
- British PM hopeful Johnson rules out any new Brexit extension
- French business sentiment declines in June to 102 vs.104 in May
- BOJ debated cost of easing in clarifying rate guidance: April meeting minutes
- Japan’s Services Producer Price Index (All items) rose 0.8% from the previous year
- Bank of Japan core CPI at 0.7% vs. 0.6% forecast
Upcoming Potential Catalysts on the Forex Calendar:
- Fed Chair Powell speaks at 6:00 pm GMT
- Fed’s Bullard speaks in St. Louis at 11:30 pm GMT
- Reserve Bank of New Zealand Cash Rate Target at 3:00 am GMT (June 25)
- German GFK consumer sentiment at 7:00 am GMT (June 25)
- Bank of England inflation hearings at 10:15 am GMT (June 25)
- U.S. durable goods, trade balance & inventories at 1:30 pm GMT (June 25)
What to Watch: NZD/CAD
The latest interest rate decision from the Reserve Bank of New Zealand is set to spark fireworks in the NZ dollar pretty soon, and if you have yet to prepare for the event then check out Forex Gump’s latest event preview here. In short, the expectations are for a “dovish hold” from the RBNZ as they wait for the upcoming quarterly inflation and employment updates for NZ in July and August.
Of course, we won’t know what we’ll get until we get there, but at the moment it looks like the odds are low that we’ll get a rate cut this week, but if we do, then Kiwi could see a continued downside. And a great way to play that would be in NZD/CAD, which recently bounced higher to test a minor area of interest (0.8750 has been both reversal and consolidation points recently) and the Fibonacci retracement area. CAD is a good counter currency play as well if you’re looking to short NZD as Middle East tensions may lead to further oil price gains (usually a supportive influence for the Canadian dollar). So if you’re a bear, look out for this type of scenario to play out and/or strong resistance in the Fib area before crafting your plan for a short position.
If the RBNZ maintains a broadly balanced outlook or shifts to a more positive tone, odds are pretty good we’ll see a relief / profit taking rally. So if you’re a bull on NZD/CAD, keep this scenario in mind, especially if NZD/CAD is able to stay above 0.8750 before taking on a long trade. But also remember this is counter the current longer-term trend, so the upside may be limited.
