Despite a busy week in the markets, NZD/USD has consolidated into a potential breakout play in the upcoming session. Will upcoming data be enough to get the pair out of its tight range?
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 11441.29 -0.45% FTSE: 7026.17 -1.20% S&P 500: 2850.28 +0.34% DJIA: 25542.33 +0.25% |
US 10-yr 1.574% -0.007 Bund 10-YR -0.683% -0.034 UK 10-YR: 0.444% -0.004 JPN 10-YR: -0.224% +0.016 |
Oil: 54.44 -1.43% Gold: 1526.10 -0.11% Bitcoin: 10073.21 +0.06% Etherium: 184.50 -1.37% |
Fresh Market Headlines & Economic Data:
- Philly Fed manufacturing index fell 5 points to 16.8 in August
- US retail sales rose solidly in July in a sign of consumer optimism
- Empire State manufacturing survey rises modestly to 4.8 vs. 4.3 in July
- U.S. manufacturing output drops in July
- ADP Canada National Employment Report: Employment in Canada Increased by 73,700 Jobs in July 2019
- Canadian National home sales rose 3.5% month-over-month in July
- China threatens retaliation if US tariff hikes go ahead
- As Hong Kong braces for protests, Chinese paramilitary holds drills across border
- UK Retail Sales in July 2019 increased by 0.2% when compared with the previous month
- Brexit: Corbyn plans to call no-confidence vote to defeat no-deal
- Swiss Producer and Import Price Index fell by 0.1% in July 2019
- RBA’s Debelle Warns World at Risk of ‘Self-Fulfilling Downturn’
- Australia unemployment stubborn even as jobs jump in July
Upcoming Potential Catalysts on the Forex Calendar:
- U.S. TIC net Long-term Transactions at 9:00 pm GMT
- New Zealand manufacturing index at 11:30 pm GMT
- Euro area trade balance at 10:00 am GMT (Aug. 16)
- U.S. Building permits & housing starts at 1:30 pm GMT (Aug. 16)
- U.S. consumer sentiment index at 3:00 pm GMT (Aug. 16)
What to Watch: NZD/USD
It’s a been a wild ride for traders over the past few days with risk aversion sentiment rocketing higher on geopolitical risks and bond market recession signals hitting this week. Even so, NZD/USD price action has actually tightened up around the 0.6450 handle, forming a symmetrical triangle in the process.
So we’ve got a simple technical setup to follow for the last watchlist post for the week: a bullish signal if the market breaks the falling ‘highs’ pattern or a bearish signal if the market breaks the rising ‘lows’ pattern. And we do have potential catalysts for volatility to rise in the form of the upcoming New Zealand manufacturing index and a slew of U.S. leading economic indicators (building permits & consumer sentiment).
For the bulls, if we do get a bullish out look from the NZ business sector and an upside break, then that should be the cue to start paying attention and forming a plan to go long, especially if U.S. data comes in weak. This is against the longer-term trend lower though, so it’s probably a good idea to keep this as a short-term play and/or have a tight exit strategy.
For the bears, a downside break works more in your favor given the longer-term trend and the overall risk aversion sentiment that has risen this week. if NZ data disappoints and the market breaks lower, this could be a high probability signal of a fresh leg lower, setting up for either a short-term or longer-term short position depending on your trading style.