Daily U.S. Session Watchlist: AUD/NZD

AUD/NZD volatility has picked up and with potential economic catalysts coming from New Zealand, Australia and China coming soon, the recent momentum is something to watch.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on NZD/USD ahead of top tier U.S. data, so be sure to check that out to see if there is still a potential play!

Intermarket Snapshot

Fresh Market Headlines & Economic Data:

• US retail sales climb in December, and November sales were revised up
• Philly Fed Index Jumps Much More Than Expected In January to 17.0 vs. 2.4 in Dec.
• U.S. import prices climb 0.3% in December on fuel costs
• U.S. weekly jobless claims drop more than expected
• ADP Canada National Employment Report: Employment in Canada Increased by 46,200 Jobs in December 2019
• Bank of England Credit Conditions Survey – 2019 Q4: Demand for lending decreased broadly
• ECB takes more upbeat view in December meetings: accounts
• German Consumer prices in 2019: +1.4% y/y, +1.5% m/m
• German employees in manufacturing in November 2019: -0.4% year on year
• China’s Credit Growth Holds Up in December

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

• ECB Lagarde speech at 6:00 pm GMT
• U.S. Net Long-term Tic flows at 9:00 pm GMT
• New Zealand Manufacturing index at 9:30 pm GMT
• Japan Foreign investment at 1:50 pm GMT (Jan. 17)
• Australia New home sales at 2:00 am GMT (Jan. 17)
• Chinese GDP, Industrial production, unemployment rate & Retail sales at 2:00 am GMT (Jan. 17)
• Japan Tertiary industry index at 4:30 am GMT (Jan. 17)

What to Watch: AUD/NZD

AUD/NZD 1-Hour Forex Chart

As we can see above in the “Upcoming Potential Catalysts” section, the Asia region will be flooded with Chinese data, as well as top tier events from New Zealand and Australia. So, it’s likely the pop in volatility for both currencies are likely to remain elevated related to the rest of the majors, making AUD/NZD one to watch.

Beyond the fundies, the pair just made a strong move lower in the last session, breaking an area of interest around 1.0415 that has held as both minor support and resistance this month. This fresh momentum could draw in more AUD/NZD sellers, and if you’re a bear on the pair, you’ll want to watch out for weak Australian and/or weak Chinese data updates before considering a short position.

The NZ is a good indicator of future economic conditions so it’s something worth watch, but it’s usually not a market mover unless we get a really big surprise. If this scenario plays out, shorting up to the 1.0415 handle is a sensible entry strategy that could lead to a swing move back to the previous lows around 1.0325 over the next few sessions.

If you’re a bull on the pair, a positive read on Australian housing and/or Chinese data will most likely bring in the Aussie bulls, at which point waiting for a break-and-retest of the 1.0415 should be on your watchlist before considering a long position. Bullish support on a break-and-retest move is a strong signal that could draw in buyers short term, and take the pair to the recent swing high around 1.0450, which is about only one daily ATR away.