NZDUSD Fundamentals (based on dailyfx article)
The NZD/USD remains at risk of marking fresh record-highs ahead of the
next Reserve Bank of New Zealand (RBNZ) policy meeting on July 23 as
the economic docket is expected to show heightening price pressures
across the region.
Indeed, the headline reading for New Zealand inflation is expected to
increase an annualized 1.8% in the second-quarter, which would mark the
fastest pace of growth since the last three-months of 2011, and
heightening price pressures may generate a further advance in the
exchange rate as it fuels interest rate expectations. According to
Credit Suisse overnight index swaps, market participants are pricing a
90% chance for another 25bp rate hike in July, but we may see the RBNZ
take a more aggressive approach in normalizing monetary policy as the
stronger recovery raises the risk for inflation.
RBNZ Assistant Governor John McDermott warned that the central bank
will aim for ‘low and stable inflation’ as the central bank raises its
outlook for growth, and the stronger recovery should continue to
heighten the appeal of the New Zealand dollar, especially as Fitch
Ratings raising its credit rating outlook for the region. With that
said, the positive developments coming out of the region may continue
to limit the downside risk for the NZD/USD, and we may see the RBNZ do
little to halt the advance in the local currency as it helps the
central bank to achieve price stability.
As a result, we will retain a bullish outlook for the NZD/USD as it
approaches the 2011 high (0.8841), and we will continue to look for
opportunities to ‘buy dips’ ahead of the RBNZ interest rate decision
should the inflation report further boost interest rate expectations.
The NZD/USD pair broke above the 0.88 level during the previous week,
suggesting that a break out was in the process of happening. If we can
break above the top of the range for the week, we believe that this
market will continue to head towards the 0.90 level. That level is the
next resistance barrier that we can see on the longer-term charts, so
therefore that’s where the market should head towards. We see a
significant amount of support below as well, so really it’s not likely
we find an opportunity to sell.
The EUR/USD pair tried to rally during the course of the week, but as
you can see gave back quite a bit of the gains in order to form a
shooting star. Nonetheless, the market seems to be stuck between the
1.35 level as support, and the 1.37 level as resistance. The resistance
above should extend all the way from 1.37 to the 1.3750 level.
Ultimately though, if we can break out of that range, we should continue
to make a longer-term move. If it’s to the upside, we go to the 1.40
level, but to the downside below the 1.35 level, we would head to the
2014-07-13 22:03 GMT (or 00:03 MQ MT5 time) | [NZD - REINZ HPI]
if actual > forecast = good for currency (for NZD in our case)
[NZD - REINZ HPI] = Change in the selling price of all homes. It's a leading indicator of the housing industry's health because rising
house prices attract investors and spur industry activity
Acro Expand = Real Estate Institute of New Zealand (REINZ), House Price Index (HPI).
New Zealand Performance Of Services Index Rises To 54.7 In June
New Zealand's services sector expanded at an accelerated pace in
June, the latest survey from Business New Zealand revealed on Monday -
showing an index score of 54.7.
That's up from a downwardly revised 54.1 in May (originally 54.2).
A score above 50 signals expansion in a sector, while a reading below 50 means contraction.
the individual components of the survey, all five elements expanded,
including supplier deliveries, new orders, stock inventories, sales and
"Many economic indicators have been going gangbusters
over the past 12 months, pointing to strong growth," Bank of New Zealand
economist Doug Steel said. "More recently, there have been a few
hinting at some degree of cooling, but to levels that are still above
Gold and Silver Facing Pivotal Week, Crude Oil Sell-Off Lacking Drive
Gold and silver
are at a critical juncture at the outset of the week with the precious
metals testing key technical levels ahead of a busy docket for the US Dollar. Meanwhile, WTI is holding steady with a string of US data prints over the week ahead likely to offer the commodity some guidance.
Gold Traders Taking Stock Ahead of Heavy US Docket
Gold is edging lower in Asian trading as investors
likely reposition themselves ahead of several noteworthy pieces of event
risk for its pricing currency, the USD, over the remainder of the week. Headlining the calendar will be the Semi-Annual Testimony from Fed Chief Janet Yellen. As noted in Friday’s commodities report,
the greenback has been unimpressed by recent guarded comments by Fed
officials on the prospect of rate hikes. If we hear a similar tone and
see an absence of hawkish guidance from Dr. Yellen the greenback could
continue to struggle, which in turn may afford gold and silver some
Reports of renewed unrest in Israel and the Gaza
Strip will also be on traders’ radars. The alternative assets tend to
perform well during periods of heightened geopolitical tension, meaning
should the situation escalate it could offer a source of support to the
precious metals. Additionally, while the Portuguese debt debacle has
faded from headlines, some embers may remain, which if sparked could
yield additional demand for the yellow metal.
Crude At A Crossroads As Middle East News Flow Set To Fade
Crude oil benchmarks have managed to hold their
ground during the Asian session thus far. This follows a relentless
sell-off during the Euro and US sessions on Friday, which saw WTI suffer its largest one day percentage decline (-2.04 percent) since March.
The easing of supply disruption fears from the
Middle East are a likely contributor to the precipitous drop. However,
with fresh news-flow from the region slowing, the prospect of a
sustained sell-off on fading production concerns alone is questionable.
At the same time, long positions as reported by the CFTC remain near
extremes which leaves the commodity vulnerable to weakness should the
right catalyst emerge.
An absence of major oil-impacting news flow from the
Middle East may leave the commodity to takes its cues from upcoming US
data this week via its implications for the demand side of the equation.
Advance Retail Sales, Industrial Production and Consumer Confidence
figures as leading indicators for the state of the US economy will be of
particular note. Upside surprises to the key pieces of data could help
signal a strong economic recovery following a dismal first quarter,
which in turn would bode well for crude oil.
CRUDE OIL TECHNICAL ANALYSIS
As suggested in last week’s commodities report the
retest of the ascending trendline on the daily offered a new entry for
short positions for WTI. With a break below 101.30, signs of a
downtrend, as well as the nullification of the Piercing Line pattern,
the downside remains preferred. The next definitive support rests at
98.90, however expect some buyers to slow the descent at the
psychologically-significant 100.00 handle.
GOLD TECHNICAL ANALYSIS
The gold bulls’ resolve is being tested in Asian
trading with the commodity pulling back to its breakout point at 1,330.
At this stage the slight correction is seen as a buying opportunity
given the uptrend remains in force. A target is offered by the 2014 high
Gold: Pullback To Support Offers New Buying Opportunities
SILVER TECHNICAL ANALYSIS
In a similar fashion to its bigger brother gold,
silver’s retreat in Asian trading may offer new entries for long
positions. However, some caution may be warranted given the Rate of Change
indicator signals fading upside momentum for the precious metal.
Additionally, a break below the ascending trendline on the daily would
suggest a potential shift in sentiment.
Silver: Pulling Back To Trendline Support
COPPER TECHNICAL ANALYSIS
Copper is at a crossroads as the base metal
consolidates between its ascending trendline on the daily and key
resistance at 3.29. With the uptrend in force a breakout would offer new
long opportunities with a target offered by 3.36.
Copper: At A Critical Juncture As Prices Consolidate
PALLADIUM TECHNICAL ANALYSIS
With an uptrend still in force for palladium, longs
remain preferred. However, with such close proximity to resistance at
875 a pullback to support at 861 may offer more favorable entries.
Palladium: Pullback To Offer New Entry Opportunities
PLATINUM TECHNICAL ANALYSIS
Sellers remain prepared to cap gains for platinum at
the 1,518, mark which suggests new entries for longs may be better
served on a breakout or retreat to 1,489. A daily close below support
would negate a bullish bias and suggest a drop to the former
range-bottom at 1,424.
Platinum: Sellers Keep Gains Capped Below 1,518
EUR/USD Pinned as EUR/JPY Pivots from June Swing; USD/CAD Emerges
If there was ever a week that could transpire a series of events flush in Euro negativity, last week failed to live up to the billing.
A revival of Euro-Zone debt crisis fears made its way through bond and
equity markets, June US labor market data clobbered expectations, and
the June FOMC minutes showed a Fed more eager to wind down its QE3 program.
EURUSD finished higher on the week, highlighting the drag low
volatility conditions have placed on meaningful follow through in some
of the major currency pairs.
So while we continue to monitor EURJPY and EURUSD as their daily charts highlight sell signals in various indicators,
there is a admittedly a lack of momentum. The current rangebound states
could be the default setting without a more substantial catalyst.
the two non-EUR pairs we're looking at are GBPCHF and USDCAD. Whereas
GBPCHF is experiencing a slight pullback amid the EUR rebound, the
nature of the Slow Stochastics and MACD indicators thus far offers no
reason to think that the uptrend from mid-March is threatened, as the
nature of the indicators and price action is still intact.
the video above for a technical discussion on EURJPY, EURUSD, and
GBPCHF, as well as notes on the recent USDCAD buying opportunity at
EUR/USD steady to higher as market preps for Yellen testimony
The euro traded steady to higher against the
dollar on Monday in a session void of major U.S. economic
indicators as investors remained in standby mode ahead of Federal
Reserve Chair Janet Yellen's congressional testimony on Tuesday and
In U.S. trading, EUR/USD was up 0.14% at 1.3626, up from a
session low of 1.3592 and off a high of 1.3640.
The pair was likely to find support at 1.3589, Thursday's low,
and resistance at 1.3651, Thursday's high.
In the minutes of the Federal Reserve's June policy meeting
released last week, the U.S. central bank predicted an October
close to its bond-buying stimulus program but did not provide a
timetable as to when interest rates may begin to rise
Falling U.S. Treasury yields have many guessing the Fed will
take its time when it comes to hiking benchmark interest rates to
ensure recovery remains on track, which allowed the dollar to slip
against the euro on Monday, a day markets prepped for Yellen's
testimony before the Senate Banking Committee on Tuesday and the
House Financial Services Committee on Wednesday.
Elsewhere, euro zone industrial output numbers that met market
expectations boosted the single currency over the greenback.
Eurostat, the statistical office of the European Union, reported
earlier that industrial output across the euro area fell by 1.1% in
May from April, less than market calls for a 1.2% contraction.
On an annualized basis, industrial production rose by 0.5%, in
line with market expectations.
Elsewhere, the euro was up against the pound, with EUR/GBP up
0.29% at 0.7975, and up against the yen, with EUR/JPY up 0.36% at
On Tuesday, the ZEW Institute is to release its closely watched
report on German economic sentiment, a leading indicator of
The U.S. is to release data on retail sales, the government
measure of consumer spending, which accounts for the majority of
overall economic activity. The U.S. is also to release data on
import prices, business inventories and manufacturing activity in
the New York state.
Strategy Video: Dollar, Pound and S&P 500 Probability vs Impact through Event Risk
In a dense round of event risk through the immediate future, there are
scenarios where the headlines can prove exceptionally market moving...or
barely tipping the needle. Expectations build up behind certain themes
and markets to minimize the impact of likely outcomes and amplify the
reaction to the less likely. In today's Strategy Video, we revisit this
scenario analysis between 'potential' and 'probability' for Fed
Chairwoman Janet Yellen's testimony, UK CPI and the general lean of a
busy docket against the Dollar, Pound and S&P 500.