New Zealand’s latest read on economic growth is right around the corner, making NZD/JPY one to watch for potential volatility and short-term technical setups.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at GBP/CAD ahead of the latest economic data from the U.K. & Canada, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
Equity Markets Bond Yields Commodities & Crypto
DAX: 15616.00 -0.68%
FTSE: 7016.49 -0.25%
S&P 500: 4480.70 +0.85%
NASDAQ: 15161.53 +0.82% US 10-YR: 1.301% +0.022
Bund 10-YR: -0.31% –0.003
UK 10-YR: 0.776% -0.003
JPN 10-YR: 0.033% -0.011 Oil: 72.70 +3.18%
Gold: 1,795.00 -0.67%
Bitcoin: $48,131.25 +3.56%
Ethereum: $3,566.30 +6.42%
Fresh Market Headlines & Economic Data:
U.S. Stocks rise, shaking off earlier losses as oil gains
UK house prices fall as property market cools
U.K. puts off Brexit checks as firms battle supply crunch
Canada’s Trudeau slammed over rising inflation as election race tightens
Japan’s machinery orders rebound in sign of capex recovery
Bitcoin ‘Golden Cross’ appears in price charts, confirming bullish trend
Solana mainnet back online after day in the dark
OpenSea exec used the platform’s influence to pump his own NFTs
Upcoming Potential Catalysts on the Economic Calendar
New Zealand GDP at 10:45 pm GMT
Japan Trade Balance at 11:50 pm GMT
Australia Consumer Inflation Expectations at 1:00 am GMT (Sept. 16)
Australia Employment Change, RBA Bulletin at 1:30 am GMT (Sept. 16)
Australia New Home Sales at 2:00 am GMT (Sept. 16)
Euro Area Trade Balance at 9:00 am GMT (Sept. 16)
ECB president Lagarde speech at 12:00 pm GMT (Sept. 16)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: NZD/JPY
On the one hour chart of NZD/JPY above, we can see that before Tuesday’s trading session, the market was trading tightly in a range, roughly between the 78.00 – 78.50 psychological handles. It was the latest update on U.S. inflation that got the pair moving on Tuesday as the lower-than-expected read had broad risk sentiment quickly popping then dropping with a negative lean and the Japanese yen leading the way. This was enough of a catalyst to break NZD/JPY out of its tight range, ultimately making it to 77.40 before sellers could run out of steam.
And the volatility may not stop there as we’ll soon get the latest GDP read from New Zealand, a data point we don’t see but once a quarter, which seems to be one of the reasons that this data point usually gets Kiwi moving.
Expectations are that the Q2 read will come in around 1.2%, below the 1.6% previous read but still expansionary. This doesn’t include the recent lockdowns, so the odds are pretty low we’ll see a deviation from that read, but in case we do, that’s where the potential opportunity may come.
For us, an inline read or better may not spark a huge move higher, and even if it does, with current concerns of a global slowdown due to the pandemic, that may be an opportunity to buy the yen in case you think risk aversion sentiment may persist. A potential bearish reversal area to watch is a retest of the previous support area around 78.00, which also lines up with the Fibonacci retracement area marked on the chart above.
Of course, if the NZ GDP massively surprises positively beyond the 1.2% forecast and 1.6% read, then it’s likely we’ll see a strong pop higher in the Kiwi. That makes any dips in NZD/JPY ahead of the event one to watch for a big bounce back to the consolidation area for some potential quick pips.
