The Kiwi spiked lower against the majors on the session. Is it still a sell after the U.S. session bounce?
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 10912.92 +0.19% FTSE: 6863.03 -0.46% S&P500: 2620.86 +0.40% DJIA: 24203.09 +0.57% |
US 10-yr 2.742% +0.034 Bund 10-YR 0.23% +0.024 UK 10-YR: 1.327% +0.07 JPN 10-YR: +0.009% UNCH |
Oil: 51.91 -0.38% Gold: 1291.60 +0.25% Bitcoin: 3620.95 +1.08% Etherium: 122.71 +2.39% |
Fresh Market Headlines & Economic data:
- U.S. mortgage applications climb to 11-month high: MBA
- German consumer prices fall sharply in December
- ECB’s Nowotny expects no major banking disruption from Brexit insecurity
- Euro zone slowdown consistent with projections -ECB’s Mersch
- UK government braces for no-confidence vote after Brexit defeat — here’s how it works
- Mark Carney: Sterling rebound reflects expectations that no-deal Brexit less likely – business live
- Brexit: Article 50 extension not necessary – DUP’s Dodds
- China just injected a record amount of money to stimulate its economy
- China must prepare for economic difficulties in 2019: Premier Li
- Even the White House knows the government shutdown is causing serious economic problems for the US
Upcoming Potential Catalysts on the Forex Calendar:
- ECB’s Galhau speaks in Paris at 5:30 pm GMT
- Fed Release Beige Book at 7:00 pm GMT
- Fed’s Kashkari speaks in New York at 11:30 pm GMT
- U.K. Government No-confidence vote (tentative)
What to Watch: NZD/USD
With another Brexit related event today, and no potentially big economic catalysts outside of that event, price action will likely remain choppy for most non-GBP pairs.
So, we’ll focus on NZD/USD for the session as it did have low to mid-tier U.S. economic data that may keep volatility bid in the Greenback, coupled with the Kiwi spiking lower against the majors during the morning London session. The Kiwi move was unusual given the lack of catalysts attributed to the move, and the broad positive market sentiment (rising equities and bond yields) that tends to support a high-yielding currency like the New Zealand dollar.
On the one hour chart above, we can see the pair breaking below the major psychological level of 0.6800, which was a level of strong interest in the past week. Given the downside momentum, if retested once again it could draw in sellers looking to play the bearish sentiment. Watch out for a retest and reversal patterns in that area if you’re a bear.
And if you’re a bull, a sustained break above 0.6800 could draw in buyers of both fresh positions (playing broad risk-on sentiment) and profit takers on short positions. With potential resistance coming in around the swing highs around 0.6850, you’ve got a pretty good potential short-term R:R risk if you keep your stop to around the daily ATR of about 60 pips.
