Kicking off the new week with this solid technical setup on NZD/CHF. Will the upcoming economic data from New Zealand keep the uptrend going?
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Fresh Market Headlines & Economic Data:
- The Chicago Fed National Activity Index fell to -0.71 in October 2019 from -0.45 in the previous month
- China to raise penalties on IP theft in trade war compromise
- Canada wholesale trade rose 1.0% to $65.1 billion in September, almost entirely offsetting the 1.2% decline in August
- China central bank warns high financial risks amid rising economic headwinds
- The Conference Board Leading Economic Index for China increased 1.3% in October 2019 to 155.6
- No ‘phase two’ U.S.-China deal on the horizon, officials say
- Boris Johnson leads by 13 points two weeks out from election
- UK Retail sales cease their decline in November
- Germany’s November Ifo Business Climate Index Rises
- Lane says ECB policies are ‘in good shape’ in current scenario
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Dallas Fed manufacturing index at 3:30 pm GMT
- ECB Lane & Mersch speech at 6:00 pm GMT
- New Zealand Retail sales at 9:45 pm GMT
- RBA Debelle speech at 11:50 pm GMT
- Japan Services PPI at 11:50 pm GMT
- Japan Core CPI at 5:00 am GMT (Nov. 26)
What to Watch: NZD/CHF
Global risk sentiment is on the upswing this week thanks to more positive U.S.-China trade headlines from the weekend. This makes high-yielders the long picks of the session, especially with a light calendar ahead for the rest of the U.S. and upcoming Asia trade.
We do have the latest New Zealand retail sales data coming to shake things up, which is likely where the best short-term opportunity lies to grab quick pips. And given that the Swiss franc doesn’t do so well in risk-on environments, NZD/CHF looks like a strong play for today’s driving themes.
On the one hour chart above, we can see the pair has been in an uptrend for almost two weeks now after bottoming around the 0.6300 major psychological level. We did see resistance form just under the 0.6400 handle, but the market was able to break higher last week.
And today, the market has pulled back to that broken resistance area, so the signal to watch for if you’re a NZD/CHF bull is for this area to hold as support combined with a better-than-expected/previous read on New Zealand retail sales data. Also, the geopolitical drivers mentioned earlier should remain positive to keep this a high probability setup.
If you’re a bear on NZD/CHF and we do see weak New Zealand retail sales data and/or a negative turn in global trade headlines, then a break of the rising lows pattern marked on the chart above should get short-term traders interested in a potential short position. And if the catalyst(s) is big enough, a break lower could return the pair to the longer-term down trend, likely bringing position traders to get in short.