Time to check out NZD/CAD as the pair breaks a major psychological level ahead of top tier events from both New Zealand & Canada.
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Fresh Market Headlines & Economic Data:
- IHS Markit Flash US PMI: Business activity growth weakens in August amid slowest rise in new orders for a decade
- U.S. jobless claims fall in sign of labor market strength
- Canadian wholesale sales rose 0.6% to $64.1 billion in June, partly offsetting the 1.9% decline in May
- The Fed didn’t need to cut rates in July, Kansas City Fed president says
- UK’s Johnson in Paris: we will not set up border checks in Ireland
- UK recession fears rise as survey points to sharp fall in retail sales
- IHS Markit Flash Eurozone PMI: growth remains muted amid ongoing manufacturing woes
- ECB eyes stimulus package as growth looks weaker: minutes
- Australian August Flash PMI show Business activity decreases for first time in five months
- Jibun Bank Flash Japan Composite PMI: Japanese economy grows at fastest pace in eight months
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand retail sales at 11:45 pm at GMT
- Japan National CPI at 12:30 am GMT (Aug. 23)
- Canada Retail sales at 1:30 pm GMT (Aug. 23)
- U.S. New home sales at 3:00 pm GMT (Aug. 23)
- Jackson Hole Summit all weekend
What to Watch: NZD/CAD
In a mostly quiet week for currencies ahead of the Jackson Hole Summit, NZD/CAD has been a standout as sellers steadily pushed the pair lower after a few better-than-expected economic updates from Canada and a broadly stronger week for oil. And we just saw the downtrend break a major psychological level (0.8500), creating a somewhat descending triangle breakdown setup on the one hour chart.
The question now is will more sellers jump in? No one knows but we do have top tier economic updates from both New Zealand and Canada in the upcoming session to at the very least keep volatility bid and the odds up that the downtrend could have further to go.
For NZD/CAD bears, a combination of weak NZ retail sales versus strong CA retail sales would likely give the downtrend a boost, making the pair a short-term sell candidate from current levels up to the falling ‘highs’ pattern (roughly below the 0.8550 handle). For the more aggressive traders, going in at market with full position or scaling up with nibblers to that area makes sense, but if you’re the more conservative type, waiting for a retest of the 0.8500 – 0.8550 area may be more your cup of tea.
For NZD/CAD bulls, it’ll likely take the combo of strong NZ retail sales and weak CA retail sales to get the market going, especially since that isn’t the current expected scenario, and if the market can break above the falling ‘highs’ on that catalyst, that would be the signal to put together a long idea. But remember to keep it short-term because it’s not prudent to have risk on during the Jackson Hole Summit, where anything can happen.