Consolidation was the name of the game for most major pairs so far.
Can NZD/USD stage a breakout soon?
Before moving on, ICYMI, yesterday’s watchlist looked at CAD/JPY’s trend line pullback ahead of the BOC decision. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
BOC kept interest rates on hold at 5.00% as expected, sees evidence of excess demand easing but is prepared to increase policy interest rate further if needed
U.S. ISM services PMI jumped from 52.7 to 54.5 in August, surpassing consensus at 52.5 to reflect sharper pace of expansion
New Zealand manufacturing sales rebounded by 0.2% q/q in Q2 2023, following earlier 2.5% slump
Australian trade surplus narrowed to 8.04 billion AUD in July, as exports fell 2.0% while imports rose 2.5%
Chinese trade surplus fell from $80.6 billion to $68.4 billion in August, as imports and exports both declined again
BOJ official Nakagawa says that it is appropriate to maintain easy monetary policy since Japanese economy is not yet at the stage of achieving the inflation target stably and sustainably
German industrial production slumped by 0.8% m/m in July vs. estimated 0.4% dip and earlier 1.5% decline
U.K. Halifax HPI slumped 1.9% m/m in August, marking its steepest drop since November last year, vs. estimated 0.1% on impact of higher interest rates
Price Action News
The Greenback got another notable boost in the previous New York trading session, as the ISM services PMI beat expectations and kept Fed tightening hopes in play.
This was soon followed by a lot of sideways action all the way to the Asian session. On the data front, another downbeat report came in from China in the form of its trade balance, which reflected more declines in import and export activity.
Sterling broke lower against the dollar early in the European session likely due to the Halifax report reflecting a 1.9% tumble in house prices due to higher interest rates.
U.S. initial jobless claims at 12:30 pm GMT
Canadian Ivey PMI at 2:00 pm GMT
FOMC member Harker’s speech at 2:00 pm GMT
BOC Governor Macklem’s speech at 5:55 pm GMT
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This pair has been pacing back and forth between support around .5870 and resistance at the .5900 major psychological mark.
Another test of the short-term ceiling seems to be in the works, and a break higher might be enough to send NZD/USD on a rally that’s the same height as the rectangle.
If that’s the case, price could attempt to test the next upside barriers at R1 (.8920) or R2 (.8940) depending on the strength of the move.
The U.S. initial jobless claims report might be a market-mover to watch out for, as significant surprises tend to push the dollar in a strong direction.
In particular, another upside surprise could allow the dollar to resume its rallies, likely dragging NZD/USD below its range support and the floor at S1 (.5850).
Don’t forget to account for the average NZD/USD volatility when trading this one!
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