We’ve got a major catalyst coming up for the New Zealand dollar, making the uptrend in AUD/NZD for both a reversal lower and a potential pop higher.
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Bank of Canada Macklem speech at 5:30 pm GMT
API Crude oil stocks at 9:30 pm GMT
Australia Construction work, Wage prices at 12:30 am GMT (Feb. 24)
RBNZ Monetary Policy Statement at 1:00 am GMT (Feb. 24)
RBNZ Press Conference at 2:00 am GMT (Feb. 24)
What to Watch: AUD/NZD
On the one hour chart of AUD/NZD above, we can see a textbook trend higher marked by higher ‘lows’. Last week, the 1.0800 handle proved to be a tough nut to crack, but the bulls were finally able to do so on Monday, pushing the pair as high as 1.0828 before pullback to the rising trendline. With bulls firmly in control, is this another opportunity to play the trend higher at a better price?
Well, that’s likely up to the upcoming monetary and interest rate policy from the Reserve Bank of New Zealand. Expectations are for the RBNZ to express optimism on the economic recovery, but downplay expectations of any kind of monetary policy tightening.
If this this scenario plays out, it’s likely AUD/NZD will maintain its uptrend, and if that rising trendline does hold, it could be a solid buying opportunity for both swing and longer-term bulls.
If we get a surprise from the RBNZ hinting at tightening monetary policy (an incredibly small, but viable possibility given the “V” shaped recovery), then the Kiwi could explode higher, creating a downside trendline break setup on AUD/NZD. That scenario would likely draw in momentum players, so consider a market short for you high risk traders and for you more conservative types, wait for the initial reaction to die down and look for resistance to form below the rising ‘lows’ pattern.