Daily Forex News and Watchlist: NZD/USD

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NZD/USD is testing a key resistance zone!

Is it time for the pair to see a decent pullback? Or are we seeing the consolidation before NZD/USD sees another leg higher?

Before moving on, ICYMI, I’ve summarized the major market themes from the previous week. Check them out before you place your first trades today!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

BOC Gov. Macklem: “Monetary policy is working to cool the economy” but added that “we are not there yet” in terms of inflation reduction

New Zealand’s building consents fell by another 4.7% m/m in September after a downwardly revised 7.0% decline in August

Japan’s unemployment rate eased from 2.7% to 2.6% in September and marked its first improvement in three months

Japan’s industrial output rose by 0.2% (vs. 2.5% expected, -0.7% previous) as demand slowed in September

Japan’s retail sales grew by 5.8% y/y in September (vs. 5.9% expected, 7.1% previous)

ANZ: New Zealand’s business confidence jumped 21 points to +23 in October; “inflation indicators were mixed”

China’s official manufacturing PMI fell into contraction, down from 50.2 to 49.5 in October; Services PMI weakened from 51.7 to 50.6

BRC: U.K.’s annual shop price inflation dropped from 6.2% to 5.2% in September, the weakest since August 2022

Bank of Japan (BOJ) maintained its ultra-low interest rates and 0% 10-year government bond yield target but also redefined 1.0% as a loose “upper bound” instead of a hard cap

Japan’s consumer confidence improved from 35.2 to 35.7 in October

Japan’s housing starts fell by 6.8% in September (vs. -6.1% expected, -9.4% previous)

Price Action News

Overlay of JPY vs. Major Currencies

Overlay of JPY vs. Major Currencies Chart by TradingView

The Japanese yen was under the spotlight today as traders priced in the BOJ policy announcements.

JPY weakened sharply in the early Asian session on speculations that the BOJ would ease its Yield Curve Control (YCC) program. While the central bank maintained its ultra-low interest rates, it DID loosen its yield curve targets to reflect 1.0% as an “upper bound” instead of a hard limit.

The yen is trading the weakest against EUR, NZD, and GBP while it’s losing the least pips against AUD and CHF.

Upcoming Potential Catalysts on the Economic Calendar:

Italy’s preliminary GDP at 9:00 am GMT
Eurozone’s core CPI flash estimate at 10:00 am GMT
Canada’s monthly GDP at 12:30 pm GMT
U.S. quarterly employment cost index at 12:30 pm GMT
U.S. Chicago PMI at 1:45 pm GMT
U.S. CB consumer sentiment at 2:00 pm GMT
RBNZ’s Financial Stability report at 8:00 pm GMT
New Zealand’s quarterly labor market data at 9:45 pm GMT
Australia’s building approvals at 12:30 am GMT (Nov. 1)
China’s Caixin manufacturing PMI at 1:45 am GMT (Nov. 1)

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

NZD/USD 15-min Forex

NZD/USD 15-min Forex Chart by TradingView

Who else is looking at NZD/USD ahead of New Zealand’s quarterly labor market data?

If the economic calendar is any clue, we may see weaker labor data from New Zealand in Q3 compared to Q2. Not good when the Reserve Bank of New Zealand (RBNZ) has already toned down its hawkishness.

On the other side of the NZD/USD pair, at least some traders are ready to price in a hawkish FOMC decision later this week.

The dollar demand could take USD higher against its major counterparts including NZD.

This is why we’re watching NZD/USD as it finds resistance from the R1 (0.5860) Pivot Point line near the ascending channel resistance in the 15-minute time frame.

If more traders price in their hawkish Fed bets, then NZD/USD could attract bearish pressure and head for the .5840 previous highs or even the .5830 Pivot Point and mid-range area.

Don’t discount a continuation of NZD/USD’s upswing though!

A risk-friendly trading environment may bring more bulls to NZD/USD’s yard. If we see USD selling or risk-taking, then the pair may find enough momentum to make new weekly highs.

Keep close tabs on this setup, forex friends!

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