More and more financial institutions are projecting that the RBNZ will be the first among the central banks to hike.
Will this be enough to spur a bounce for NZD/JPY?
Before moving on, ICYMI, today’s Asia-London session watchlist looked at resistance zones on EUR/AUD ahead of Germany’s industrial production release. Be sure to check that out if it’s still a valid play!
And don’t forget to check our newly released real-time Currency Strength Meter!
Fresh Market Headlines & Economic Data:
- Sydney enters another week-long lockdown on Delta variant spread
- China-U.S. yield spread widens to 4-month high
- Asian markets slide ahead of FOMC minutes release
Upcoming Potential Catalysts on the Economic Calendar:
- German industrial production at 6:00 am GMT
- EU economic forecasts at 9:00 am GMT
- Canadian Ivey PMI at 2:00 pm GMT
- U.S. JOLTS job openings at 2:00 pm GMT
- FOMC meeting minutes at 6:00 pm GMT
What to Watch: NZD/JPY
Don’t look now, but NZD/JPY is sitting right at the bottom of its freshly-formed ascending channel!
Will Kiwi bulls defend this support zone?If the channel bottom keeps holding as a floor, the pair could climb back to the top at 79.00 or at least until the mid-channel area of interest.
Stochastic is confirming that buyers might be looking to return, as the oscillator just pulled up from the oversold region.
Keep in mind that the outlook for the RBNZ is strongly hawkish, as more market analysts from financial institutions are forecasting that New Zealand might be the first among its peers to enjoy a rate hike.
Westpac is projecting that the RBNZ could increase interest rates by November this year, following ANZ’s estimate that the OCR could rise by June 2022.
However, risk sentiment might still be the main driver of price action throughout the day, especially as traders pare bets ahead of the FOMC minutes release.A clear hawkish shift could be enough to revive risk-off flows, given how markets reacted to the actual Fed statement a few weeks back.
If the minutes of the Fed’s policy meeting confirm that more policymakers are calling for tapering soon, the safe-haven yen could win out against the riskier Kiwi.
Better keep your eyes on the 77.50 minor psychological mark at the NZD/JPY channel bottom if you’re waiting for a break lower!