NZD/USD just broke below Monday’s lows on today’s cautiously optimistic sentiment on the U.S. – China trade negotiation story. More downside ahead on the session?
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 10908.51 +1.50%
FTSE: 6894.31 +1.22%
S&P500: 2570.87 +0.83%
DJIA: 23804.85. +1.16%
|US 10-yr 2.708% +0.026
Bund 10-YR 0.236% +0.021
UK 10-YR: 1.269% +0.012
JPN 10-YR: -0.007% +0.009
|Oil: 49.33 +1.67%
Gold: 1282.50 -0.57%
Bitcoin: 4058.20 +1.10%
Etherium: 161.55 +0.80%
Fresh Market Headlines & Economic data:
- U.S.-China trade talks continue for a second day, few details: source
- UK’s Brexit vote planned for Jan. 15, no plans to delay EU exit
- US December NFIB small business optimism index 104.4 vs 103.0 expected
- German industrial production unexpectedly slumps
- Annual house price growth ends 2018 at 1.3%: Halifax
Upcoming Potential Catalysts on the Forex Calendar:
- U.S. JOLTS Job Openings at 3:00 pm GMT
- U.S. Consumer Credit at 8:00 pm GMT
- AU AIG Services Index at 9:30 pm GMT
What to Watch: NZD/USD Break Lower
The driving theme of the day seems to be the story that traders are optimistic the U.S. and China could move forward on a trade deal, sparking broad risk-on sentiment in the equity markets, as well as a decline in demand for safe havens like bonds and gold. This also seems to be pushing up the oil markets, as well as the Greenback on the session.
For today’s watchlist, the consistence grind lower in NZD/USD could be the setup to play the broadly stronger dollar theme, especially now that we’ve seen the pair break Monday’s lows around 0.6730.
Short-term volatility could pick up once again with upcoming U.S. economic data in the form of JOLTS job openings survey and U.S. consumer credit data later in the U.S. session, another reason to continue to look at Dollar pairs for the session.
With the pair in a strong intraday trend lower on a fundamental driver, it makes sense to go short but the risk-to-reward looks less favorable at current levels. Waiting for a possible retest of the Asia and morning London session lows could be a better play as a stop above the minor area of interest (around 0.6750) and a target around last weeks consolidation area (between 0.6680 – 0.6700) provides a better R:R setup.
For you NZD/USD bulls out there, a break above the falling ‘highs’ is a possible setup given weakness in the upcoming U.S. data or if a negative development comes out on the U.S. – China trade talk story.
Fresh developments in the other major market drivers like Brexit negotiation updates and monetary policy updates from major central banks are still live as potential catalysts, so keep your risk very low when trading short-term.