Volatility is light and news catalysts are slim, but this short-term setup on NZD/JPY could be one to watch with this risk-off environment.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 10824.00 -0.58% FTSE: 6850.71 -0.98% S&P500: 2577.37 -0.73% DJIA: 23849.28 -0.67% |
US 10-yr 2.688% -0.011 Bund 10-YR 0.216% -0.005 UK 10-YR: 1.262% -0.031 JPN 10-YR: +0.012% -0.005 |
Oil: 51.24 -0.68% Gold: 1293.00 +0.27% Bitcoin: 3535.00 +0.71% Etherium: 116.72 +0.98% |
Fresh Market Headlines & Economic data:
- EU letter seeks to reassure UK on Irish border backstop
- Theresa May urges MPs to back Brexit deal ‘for country’s sake’
- Theresa May refuses to rule out Brexit article 50 extension
- Eurozone recession fears grow after industrial production takes a tumble
- China’s Annual Trade Surplus With U.S. Hits Record Despite Trump’s Tariff Offensive
- China’s overseas investment into North America and Europe falls 73 percent in 2018, survey shows
- World shares sink after China reports slowdown in exports
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand NZIER Business Opinion Survey at 9:00 pm GMT
- New Zealand Food Price Index at 9:45 pm GMT
What to Watch: NZD/JPY
Thanks to a string of bad economic news from China and Europe this morning, financial markets have a risk-off tilt as equity markets and oil prices take a dip. Safe havens like gold and bonds tick higher as well, so it’s probably a good idea to lean risk-off on the session.
This brings us to today’s watchlist setup on NZD/JPY. Fundamentally, we’ve got a couple of mid-tier economic events just after today’s U.S. close, which could spark volatility, though likely very small and short-term moves.
In terms of price action, the pair fell during the morning Asia session on the weak China data, but has since then bounced higher through Europe and morning U.S. trading to now reach a 50% Fib retracement of today’s move. This area also lines up a short-term support area that held on Friday that was broken, so it could draw in sellers if retested.
For the bears looking to play the broad risk-off sentiment that the weak China and European economic data brought to the markets today, look for resistance patterns from current market levels up to the major psychological level of 74.00.
For the bulls, potential resistance can be seen all the way up to 74.20, so it’s prudent to wait for a break higher, preferably on a fresh catalyst driving bullish global risk sentiment, which could likely support NZD/JPY higher.
And with no major economic data points ahead, odds are that volatility will remain low, so setting up for 10 to 20 pips in risk in either direction is probably what would work for a day like today.
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.
