Risk aversion in the last trading sessions produced extended moves in a lot of the major dollar pairs.
Can GBP/NZD provide an equally promising trade opportunity?
Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist talked about EUR/USD possibly breaking below a key support level ahead of the Eurozone’s PMI reports. Be sure to check that out to see if there is still a potential play!
Fresh Market Headlines & Economic Data:
- Treasury yields fall following Fed Chair Powell’s comments on the economy
- BOC discontinues market functioning programs introduced during COVID-19
- Australia’s NSW ‘back to normal’ a year after pandemic
- New Zealand posts 181M NZD trade surplus after 647M NZD deficit in January
- Australian PMIs: Stronger inflow of new work boosts output growth in March
- BOJ debated future scope to assist green, digital investment – January minutes
- Japan’s factory activity picks up in March on growing output, orders – flash PMI
- Asian shares hit two-week lows, dollar gains as investors scurry for cover
- Slump in clothes prices causes surprise UK inflation dip
- Germany’s 10-year Bund yield falls to 5-week low on coronavirus worries
Upcoming Potential Catalysts on the Economic Calendar:
- Eurozone’s flash PMIs at 9:00 am GMT
- U.K.’s flash PMIs at 9:30 am GMT
- U.S. core durable goods orders at 12:30 pm GMT
- U.S. flash PMIs at 1:45 pm GMT
- Fed’s Powell to talk CARES Act along with Treasury Secretary Janet Yellen at 2:00 pm GMT
- EIA crude oil inventories at 2:30 pm GMT
What to Watch: GBP/NZD
GBP/NZD found resistance at the 1.9700 area and it looks like the bears are ready to undo some of the pair’s upswing from the last couple of days.
Traders are selling the pound after the U.K. printed a disappointing inflation report at a time when markets were already worried about the government imposing travel bans during the summer season.Meanwhile, the New Zealand government introducing housing market measures to curb property price inflation doesn’t seem to have affected NZD’s demand against GBP. Of course, it also helps that New Zealand has just printed a trade surplus even though both its imports and exports saw dips in February.
Over the next trading sessions, we’ll see the U.K. and the U.S. print their PMI reports for March. Word around is that the releases would highlight just how far activities have to heat up before we see any sustainable recovery.
If the U.K.’s PMIs come in worse-than-expected, then GBP/NZD could extend its current downswing and head towards the 1.9450 levels near the March resistance area.
If headlines from the U.S. session inspire a general risk-averse mood, though, then GBP/NZD could limit its current downswing to the 38.2% Fib or even maintain its consolidation between 1.9600 – 1.9700.