The latest monetary policy statement from the Reserve Bank of New Zealand is right around the corner, making the downtrend bounce in NZD/USD one to watch for potential short-term pips.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at NZD/JPY ahead of the upcoming RBNZ statement, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
Equity Markets Bond Yields Commodities & Crypto
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S&P 500: 4300.46 -1.30%
NASDAQ: 14433.83 +1.25% US 10-YR: 1.527% +0.046
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UK 10-YR: 1.095% +0.008
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Ether: $3,495.76 +2.33%
Fresh Market Headlines & Economic Data:
Dow rebounds 400 points, wipes out Monday’s losses
U.S. Services Index indicates modestly faster growth In September
Fed’s Evans: high inflation to fall as supply bottlenecks addressed
U.S. faces a recession if Congress doesn’t address the debt limit within 2 weeks, Yellen says
US Bank launches bitcoin custody service as institutions race to cater to crypto demand
Bitcoin flirts with $50,000 as BofA says ‘too large to ignore’
IMF says trimming global growth forecast due to rising risks
Oil surges to highest since 2014 as OPEC maintains supply hike
JP Morgan Global Composite PMI rose to 53 in September vs. 52.5 in August
UK Services PMI for September: 55.4 vs. 55.0 in August
Upcoming Potential Catalysts on the Economic Calendar
Australia Inflation Gauge at 1:00 am GMT (Oct. 6)
RBNZ Monetary Policy Statement at 1:00 am GMT (Oct. 6)
Bank of Japan Governor Kuroda speech (Tentative)
German Factory Orders at 6:00 am GMT (Oct. 6)
U.K. Construction PMI at 8:30 am GMT (Oct. 6)
Euro area Retail Sales at 9:00 am GMT (Oct. 6)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: NZD/USD
NZD/USD hits the top of the watchlist, not only for potential volatility to hit the pair with a top tier catalysts ahead, but also a pretty textbook trend setup in the works on the one hour chart above.
In terms of volatility, there’s a chance it may pick up quickly for the New Zealand dollar as we’ll soon get the latest monetary policy decision from the Reserve Bank of New Zealand in the upcoming Asia session. Expectations are for the RBNZ to actually hike the overnight cash rate from 0.25% to 0.50%, so the odds are pretty good we’ll get some action, especially if they don’t make any policy changes.
Since the likelier scenario is for a rate hike, it’s probably more probable for the Kiwi to rally, especially if they signal more hikes down the road. And if NZD/USD does pop higher, that could draw in more short-term technical players to play the break above the short-term resistance marked on the chart above around the minor resistance area around 0.6980 – 0.7000.
Now, if we get the surprise where the RBNZ does not hike interest rates, both fundie traders and technical traders could pile in to play not only the surprise result, but also the trend lower we saw during the month of September. Look out for bearish patterns at the current resistance area (61% Fibonacci retracement level and broken previous “support-turned-resistance”) before considering a short position.
If the pair moves lower, a retest of the 0.6900 level should be a reachable level given the 65 daily ATR, and possibly a test of the previous swing low around 0.6850 in the session given that this is a central bank catalyst.
