Will volatility spike higher with the latest interest rate statement coming soon from the Reserve Bank of New Zealand? Will that draw in sellers to the bearish technical setup on NZD/CHF?
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at EUR/NZD ahead of events from both Europe and New Zealand, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines and Economic Data:
U.S. to release oil from reserves in coordination with other countries to lower gas prices
Fed’s Bostic: Powell, Brainard appointments remove uncertainty for Fed
Bank of England may scale back policy guidance; Governor Bailey is not a fan of ‘forward guidance’
Bank of England should be vigilant on labour costs – Haskel
UK Manufacturing PMI in November: 58.2 vs. 57.8 previous
Eurozone Manufacturing PMI at 58.6 in November vs. 58.3 in October
Flash Australia Manufacturing PMI: 58.5 in Nov. vs. 58.2 in October
IMF says bitcoin should not be legal tender in El Salvador
Upcoming Potential Catalysts on the Economic Calendar
API Crude Oil Stocks Change at 9:30 pm GMT
RBA Bullock speech at 10:15 pm GMT
Australia Construction Work Done at 12:30 am GMT (Nov. 24)
Japan Manufacturing & Services PMI at 12:30 am GMT (Nov. 24)
Germany Ifo Business Climate Indicator at 9:00 am GMT (Nov. 24)
U.K. CBI Industrial Trends Orders at 11:00 am GMT (Nov. 24)
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What to Watch: NZD/CHF
We’re only a few hours away from the Reserve Bank of New Zealand’s latest monetary policy statement, which will likely get the Kiwi moving fast as this is the big event of the week for forex traders. Everyone expects a 0.25% interest rate increase, and the big question is whether or not the RBNZ will hint at future rate hikes not too long after this one.
With global prices running pretty hot at the moment, and expectations that the inflation rate will continue to rise in New Zealand, the odds look to favor those who think the RBNZ won’t stop with a rate hike in this week’s meeting. If they do indeed hint at more rate hikes ahead, today’s bounce in NZD/CHF may have more room to run.
In this scenario, we’ll look for a sustain break of the 0.6500 major psychological area, which has been a very strong area of interest in November, especially over the last week. It held as support against multiple retests before breaking lower in yesterday’s session, so if it does break above, then that could draw in technical momentum buyers in the short term.
In a scenario where the RBNZ hikes but looks to “wait-and-see” how the inflation environment develops before raising rates further, it’s possible this bounce could draw in fresh short-term sellers, as well as profit takers who rode the Kiwi higher in today’s session.
In the off chance that the RBNZ does not raise rates today, it is likely we could see a sharp move lower after the announcement, so it’s probably a good idea to wait for the RBNZ to make a move before putting up positions to try to play the event. Or at the very least, keep position sizes small to give you flexibility with your adjustment options in case there are any surprises.
