Checking out NZD/JPY as it holds a recent triangle break, ahead of potential catalysts from both New Zealand and Japan.
Before moving on, ICYMI, today’s Daily London Session Watch list looked at an opportunity forming on USD/CAD ahead of a busy U.S. economic calendar, so be sure to check that out to see if there is still a potential play!
|Equity Markets||Bond Yields||Commodities & Crypto|
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DJIA: 28115.55 -0.02%
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Fresh Market Headlines & Economic Data:
- US economy grew at a moderate 2.1% annual rate in the third quarter
- U.S. core capital goods orders post biggest gain in nine months
- U.S. personal consumption expenditures (PCE) increased $39.7B (0.3%) in October.
- U.S. Pending home sales fall 1.7% in October, as housing shortage worsens
- German import prices declined by 3.5 percent year-on-year in October 2019
- Chicago PMI shows region’s economic health contracting but not as weak as October
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Fed Beige book at 7:00 pm GMT
- Japan Retail sales & Foreign investments at 11:50 pm GMT
- New Zealand Business confidence at 12:00 am GMT (Nov. 28)
- Australia Private capital expenditure at 12:30 am GMT (Nov. 28)
What to Watch: NZD/JPY
Without major events scheduled for the rest of the U.S. session and Asia session, it’s likely that the current global risk themes and technical analysis will be the main drivers for the next couple of sessions. That makes NZD/JPY one to watch as it tends to have a positive correlation with global risk sentiment (e.g., yen tends to weaken in risk-on environments like we’ve seen recently) and on the one hour chart above, we can see a recent break above the classic rising symmetrical triangle.
Looking ahead, we don’t have much to likely spark a strong momentum move, but we’ve got mid-tier economic catalysts that could spark some volatility (Japan retail sales & New Zealand business confidence).
If you’re a bull on NZD/JPY, then the odds are in your favor, especially if we see a positive read from NZ, negative retail sales from Japan, and/or more positive developments in the global trade story. Going long at market down to the broken resistance area just under 70.00 is a valid entry strategy, but of course it’s likely more prudent to wait for a pullback given the stochastic showing potentially overbought conditions.
If you’re bear on NZD/JPY, a negative New Zealand business sentiment update and a positive Japanese retail sales update could spark some selling, but it’s probably a good idea to wait and see if the rising ‘lows’ pattern will break and hold lower. A negative turn in the global trade story would also likely be a good catalyst to consider a short, and in this scenario the potential for selling momentum would be higher given the bullish sentiment that’s been driving the pair for the past two weeks (profit taking and momentum sellers). With a daily ATR of around 60 pips, the recent swing low around 69.00 would be a reasonable target in this scenario within a week.