With no scheduled major catalysts immediately ahead, we’re checking out momentum moves, specifically in GBP/NZD after today’s RBNZ monetary policy meeting.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on NZD/JPY after a bullish reaction to the RBNZ statement, so be sure to check that out to see if there is still a potential play!
| Equity Markets | Bond Yields | Commodities & Crypto |
|
DAX: 13206.03 +0.33% FTSE: 6357.22 +0.96% S&P 500: 3565.29 +0.56% NASDAQ: 11717.05 +1.41% |
US 10-YR: 0.96% +0.002 Bund 10-YR: -0.507% -0.020 UK 10-YR: 0.41% +0.008 JPN 10-YR: +0.037% +0.006 |
Oil: 42.50 +2.76% Gold: 1,861.30 -0.80% Bitcoin: 15,684.79 +1.83% Ethereum: 462.52 +0.84% |
Fresh Market Headlines & Economic Data:
S&P 500, Nasdaq gain as investors buy tech shares beaten up this week
U.S. Mortgage applications decreased 0.5% w/w for the week ending Nov. 6 – MBA
Fed’s Rosengren says next 6 months will be ‘pretty choppy’ despite vaccine news
OPEC cuts 2020 oil demand forecast again on rising Covid cases — sees slower recovery next year
China urges U.S. to stop increasing ties with Taiwan
Lagarde warns against vaccine optimism and hints at more ECB easing
Ireland sees EU-UK trade talks going past mid-November deadline
ECB must act to fend off deflation, Bank of Spain official says
Upcoming Potential Catalysts on the Economic Calendar
New Zealand Visitor Arrivals at 9:45 pm GMT
Japan Machine Orders, PPI at 11:50 pm GMT
Australia Consumer Inflation Expectations at 12:00 am GMT (Nov. 12)
U.K. RICS House Price Balance at 12:01 am GMT (Nov. 12)
Bank of Japan Adachi speech at 1:30 am GMT (Nov. 12)
Japan Tertiary Industry index at 4:30 am GMT (Nov. 12)
What to Watch: GBP/NZD
On the one hour chart above of GBP/NZD, we can see the pair has been in a slow down trend lower, a bias recently supported by a spike higher in the Kiwi during the Asia session. It seems that the catalyst for that fast move was expectations of the RBNZ moving towards negative interest rates was priced out of the market during their latest monetary policy statement.
And with no good news coming from the U.K. on Brexit recently (UK Govt Suffers Parliamentary Defeat Over Brexit Bill), and none expected on the economy coming out in the near future (UK unemployment rate continues to surge, rising to 4.8%), it looks like the trend lower has a strong probability of continuing based on fundamental biases.
That means for bearish GBP/NZD traders, the ball is in your court, and given the trend lower, you’ve got a few entry options based on your risk tolerance and outlook on short-term price action.
If you think a bounce from today’s spike lower is in the cards, watch out for a retest of the potential resistance area that could form between the broken support level (1.9350) up to the falling ‘highs’ pattern marked on the chart above.
For the more aggressive traders who sees the previous swing low (1.9182) being broken at the moment, then a short at market with a wide stop makes sense for a scalp or day trade. For swing traders, it may be a good idea to be a little more patient and wait for a bounce given that stochastic is signaling oversold conditions, or consider scaling in to a short position, starting with a nibbler sized short and adding if the pair bounces.
