The upcoming quarterly New Zealand jobs update could be a market mover for the Kiwi, making this consolidation pattern on NZD/USD one to watch for short-term pips!
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD ahead of the German Court ruling, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
- U.S. trade deficit soars 12% in March as coronavirus slams exporters and tourism
- IHS Markit U.S. Services PMI fell to 26.7 in Apr. vs. 39.8 in Mar.
- April’s ISM nonmanufacturing index comes in at 41.8, vs 40 expected
- Canada’s trade deficit widened from $894 million in February to $1.4 billion in March.
- German court hands ECB three-month ultimatum to justify stimulus scheme
- Industrial producer prices down by 1.5% m/m in March in euro area; Down by 1.4% in EU
- Spanish upemployment increased by 282,891 people in the month of April m/m
- Ireland sees crisis point in Brexit talks if no progress soon – Coveney
- UK Services PMI falls sharply to 13.4 in April vs. 34.5 in March
- UK new car sales plunge 97% to lowest level since 1946
- Swiss Consumer prices fell by 0.4% in April; -1.1% y/y
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Fed Bullard speech at 6:00 pm GMT
- Fed Bostic speech at 6:00 pm GMT
- API Crude oil inventory at 8:30 pm GMT
- New Zealand Employment change at 10:45 pm GMT
- Australia Retail sales at 1:30 am GMT (May 6)
What to Watch: NZD/USD
As previously mentioned in the intro above, we’ve got a top tier catalyst coming from New Zealand in the form of the quarterly employment update, which could get the Kiwi moving in the late afternoon U.S. session / very early Asia session.
Expectations are for the unemployment rate to jump from 4.0% to 4.5% in Q1 2020, and total employment could dip by 0.2%.
Updates outside of these expectations could spark a volatile move, making the consolidation pattern on NZD/USD one to watch.
On the one hour chart above of NZD/USD, we can the pair forming a rising wedge pattern after a two-session drop, and with a top tier catalyst on the way, odds are rising of a potential breakout from the consolidation pattern.
If you’re a bull on NZD/USD, watch out for a better-than-expected update on NZ employment and an upside break of consolidation before considering a long position.
The odds of success are pretty good in this scenario, especially if global risk sentiment remains leaning towards positive as economies around the world open back up.
If you’re a bear on NZD/USD, watch out for a weaker-than-expected update on NZ employment and a downside break of consolidation before considering a short position.
This is counter the current risk sentiment environment, so if we see a shift there (e.g., rising geopolitical tensions, accelerated COVID infection/death rates, etc), then a short play makes sense for some quick pips.