AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie CPI Decline Points Toward Weak Outlook for Economy

The Australian and New Zealand Dollars are trading mixed early Wednesday as investors await the release of the latest policy moves by the U.S. Federal Reserve. The currencies are being supported by a weaker greenback as the U.S. struggles to contain a spike in coronavirus cases that threatens to derail a quick economic recovery. In other news, weaker than expected Australian consumer inflation helped cap prices that are currently hovering just under a 15-month high.

At 05:55 GMT, the AUD/USD is trading .7166, up 0.0009 or +0.12% and the NZD/USD is at .6656, down 0.0002 or -0.03%.

U.S. Federal Reserve Outlook

The harsh outlook for the world’s largest economy is expected to encourage Federal Reserve policymakers to stick to a dovish stance at its policy review, due to be released at 18:00 GMT. Australian Dollar bulls seem to be betting the Fed could hint at other ways to loosen policy down the road.

Investors will be watching the Fed announcements for any indications that the U.S. central bank will increase its purchases of longer-dated debt, implement yield caps or target higher inflation than it has previously indicated when it concludes its two-day meeting on Wednesday.

Australian Consumer Prices Fall in Second Quarter

Earlier in the session, the AUD/USD traded near its 15-month peak of .7182, but stepped back slightly after data showed Australia’s consumer prices fell by a record in the second quarter. The coronavirus pandemic is being blamed for causing one-off slides in the cost of child care and petrol, dealing a damaging setback to years of progress toward higher inflation.

The consumer price index (CPI) dived 1.9% in the second quarter, from the first, causing annual prices to drop 0.3% in the first negative reading since 1998. Forecasts called for a decline of 2.0% and 0.4% respectively.

Core measures of inflation that strip out the largest price moves were also subdued, with the trimmed mean dipping 0.1% for the first fall in its history. Annual core inflation slowed sharply to 1.2%, from 1.8% in the March quarter.

The news was a damaging blow to the Reserve Bank of Australia (RBA), which had only just managed to get inflation back up into its 2-3% target band after years of sub-par readings. Neither is the outlook favorable given the economy is almost certainly in its first recession since the early 1990s.

Daily Forecast

Short-term, the AUD/USD is bullish and could pop to more than 15-month highs later today if the Fed delivers a more-than-expected dovish stance.

Longer-term, the outlook is a bit gloomy with the RBA likely to be concerned that a run of low readings will drag down expectations of future inflation, lowering wage growth and making it harder to get prices up.

At its next meeting RBA policymakers are likely to address ways to prop up inflation after already cutting rates to a record low of 0.25% and taking the exceptional step of pledging to keep rates down for years to come in the hope of avoiding a drift toward damaging deflation.

Essentially, a dovish Fed should be supportive for the Aussie, but gains are likely to be capped as low inflation concerns move to the forefront.

For a look at all of today’s economic events, check out our economic calendar.

The Stimulus Package, COVID-19, and the FED Keep the Dollar in Focus

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar. The Aussie Dollar was in action in the early part of the day.

Away from the economic calendar, COVID-19 and the U.S stimulus package remained in focus ahead of the FED.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 241,391 to 16,883,654 on Tuesday. On Monday, the number of new cases had risen by 229,469. The daily increase was higher than Monday’s rise and up from 240,565 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 2,602 new cases on Tuesday, which was down from 7,167 new cases on Monday. On the previous Tuesday, 1,889 new cases had been reported.

From the U.S, the total number of cases rose by 64,799 to 4,498,209 on Tuesday. On Monday, the total number of cases had increased by 61,571. On Monday, 21st July, a total of 67,140 new cases had been reported.

For the Aussie Dollar

2nd quarter inflation figures were in focus in the early part of the day.

The annual rate of inflation came in at -0.3%, which was marginally better than a forecasted -0.4%. In the 1st quarter, the annual rate of inflation had stood at 2.20%. In the 1st quarter, the annual rate of inflation had accelerated from 1.8% to 2.20%. Quarter-on-quarter, consumer prices fell by 1.90%, following a 0.3% rise in the 1st quarter. Economists had forecast a 2.00% slide.

According to the ABS,

  • The June quarter slide was attributed to free child care (-95%), sliding automotive fuel prices (-19.3%), and a fall in pre-school and primary education prices (-16.2%). Excluding these, consumer prices would have risen by 0.1%.
  • Cleansing and maintenance price rose by 6.2%, with non-durable household products up by 4.5%.
  • There were also increases in prices for furniture (+3.8%), major household appliances (+3.0%), and audio, visual, and computing equipment (+1.8%).
  • In the June quarter, the quarter-on-quarter decline was the largest in the 72-year history of the CPI.
  • It was only the 3rd time since 1949 that the annual rate of inflation had turned negative.

The Aussie Dollar moved from $0.71645 to $0.71575 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.04% to $0.71575.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.03% to ¥105.14 against the U.S Dollar, with the Kiwi Dollar down by 0.11% to $0.6654.

The Day Ahead:

For the EUR

It’s another particularly quiet day ahead on the economic calendar. There are no material stats from the Eurozone to provide the EUR with direction.

The lack of stats will leave the EUR in the hands of COVID-19 updates and geopolitics. Late in the day, the FED is also in action later in the day.

From the U.S, the continued spike in new COVID-19 cases has weighed heavily on the Dollar. Any 2nd wave hitting EU member states beyond Spain would be a test the EUR.

At the time of writing, the EUR was up by 0.03% to $1.1720.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of Brexit and market risk sentiment.

At the time of writing, the Pound was down by 0.11% to $1.2918.

Across the Pond

It’s another relatively busy day ahead for the U.S Dollar. June pending home sales and goods trade figures are due out later today.

The stats will likely have a muted impact on the Dollar and risk sentiment, however. For the Dollar and the broader market, the FOMC monetary policy decision and press conference is the main event.

Away from the calendar, the U.S stimulus package, tensions between the U.S and China, and COVID-19 will remain in focus.

At the time of writing, the Dollar Spot Index was up by 0.10% to 93.788.

For the Loonie

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of the weekly EIA crude oil inventory numbers and market risk sentiment.

The key to the U.S economy and its trading partners is the passing of the latest COVID-19 stimulus package. Any further delays would further limit the upside in the Loonie.

At the time of writing, the Loonie was down by 0.01% to C$1.3381 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

NZD/USD Forex Technical Analysis – Could Be Forming Bearish Closing Price Reversal Top

The New Zealand Dollar touched an eight-month high of .6703 early Tuesday then turned lower for the session, an earlier indication of a potentially bearish closing price reversal top. The move was triggered by a recovery in the U.S. Dollar ahead of a Federal Reserve meeting and as the U.S. Congress moved closer to settling on the next fiscal stimulus package.

At 06:28 GMT, the NZD/USD is trading .6650, down 0.0035 or -0.52%.

Looking ahead, the Fed begins a two-day meeting on Tuesday with no policy change anticipated when it makes its monetary policy announcement on Wednesday. Meanwhile, the U.S. Congress is under pressure to approve a new fiscal stimulus package before the old one expires on Friday.

In other news, U.S. consumer confidence and manufacturing data are due at 1400 GMT. This will give traders the latest read on progress in the U.S. economic recovery.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier in the session when buyers took out the previous main top at .6690. The main trend will change to down on a trade through the last swing bottom at .6615.

The minor range is .6615 to .6703. Its 50% level at .6659 is exerting some influence on the direction of the trade today.

The short-term range is .6503 to .6703. If the main trend changes to down then its retracement zone at .6603 to .6579 will become the next downside target.

The intermediate range is .6381 to .6703. Its retracement zone at .6542 to .6504 is controlling the near-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the NZD/USD on Tuesday will likely be determined by trader reaction to Monday’s close at .6685.

Bearish Scenario

A sustained move under .6685 will indicate the presence of sellers. This will also put the NZD/USD in a position to form a potentially bearish closing price reversal top. If confirmed, this could lead to the start of a 2 to 3 day correction.

Crossing to the weakside of the 50% level at .6659 will indicate the selling is getting stronger with the next target the main bottom at .6615.

A trade through .6615 will change the main trend to down. This could trigger a further break into the retracement zone at .6603 to .6579. Counter-trend buyers could emerge following a test of this zone.

Bullish Scenario

Holding above .6659 will be the first sign of buyers. If this creates enough upside momentum then look for buyers to try to recapture .6685.

Turning higher for the session on a trade through .6685 could lead to a retest of .6703. This is a potential trigger point for a surge into the December 31, 2919 main top at .6756.

For a look at all of today’s economic events, check out our economic calendar.

Consumer Confidence, COVID-19, and Fiscal Stimulus Keep the Greenback in Focus

Earlier in the Day:

It’s was another quiet start to the day on the economic calendar. There were no material stats through the Asian session to provide the majors with direction.

A lack of stats left the markets in the hands of geopolitics and COVID-19.

Tensions between the U.S and China and the continued spike in new U.S COVID-19 cases support the Asian majors amidst the Dollar meltdown.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 229,469 to 16,642,263 on Monday. On Sunday, the number of new cases had risen by 213,347. The daily increase was higher than Sunday’s rise and up from 182,589 new cases from the previous Monday.

Germany, Italy, and Spain reported 7,167 new cases on Monday, which was up from 663 new cases on Sunday. On the previous Monday, 5,413 new cases had been reported. The spike came from Spain that had not reported any new cases for 2 consecutive days before a 6,361 jump on Monday.

From the U.S, the total number of cases rose by 61,571 to 4,433,410 on Monday. On Sunday, the total number of cases had increased by 56,130. On Monday, 20th July, a total of 62,790 new cases had been reported.

The Majors

At the time of writing, the Japanese Yen was up by 0.07% to ¥105.30 against the U.S Dollar. The Aussie Dollar was up by 0.28% to $0.7169, with the Kiwi Dollar up by 0.21% to $0.6698.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar. There are no material stats from the Eurozone to provide the EUR with direction.

A lack of stats will continue to leave the EUR in the hands of COVID-19 and geopolitics. With the Greenback on the slide as a result of the continued rise in new COVID-19 cases, only an EU-wide 2nd wave can really do any damage.

At the time of writing, the EUR was up by 0.11% to $1.1765.

For the Pound

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will leave the Pound in the hands of Brexit and market risk sentiment.

At the time of writing, the Pound was up by 0.13% to $1.2899.

Across the Pond

It’s another relatively busy day ahead for the U.S Dollar. July consumer confidence and May house price figures are due out later today.

With the FED in action tomorrow, we can expect plenty of interest in the consumer confidence figures. The U.S is struggling with the 2nd wave of the COVID-19 pandemic. Concerns over the impact on the economy amidst current unemployment levels will likely weigh.

Away from the calendar, the U.S stimulus package, tensions between the U.S and China, and COVID-19 will also influence.

At the time of writing, the Dollar Spot Index was down by 0.17% to 93.513.

For the Loonie

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

Concerns over the impact of COVID-19 on the U.S economy has limited the upside for the Loonie. Rising tensions between the U.S and China have also impacted. The narrative is unlikely to change anytime soon, particularly as the U.S struggles to curb the 2nd wave spread of the virus.

At the time of writing, the Loonie was up by 0.16% to C$1.3334 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

COVID-19, Economic Data, Geopolitics, and Fiscal Stimulus in Focus

Earlier in the Day:

It’s was a quiet start to the week on the economic calendar. There were no material stats through the Asian session to provide the majors with direction.

A lack of stats left the markets in the hands of geopolitics and COVID-19.

Negative sentiment towards the U.S – China spat and a continued rise in new COVID-19 cases weighed on risk appetite.

News of the Republicans agreeing on the next Stimulus package in the U.S supported riskier assets in the early part of the day, however.

Economic data from the U.S was skewed to the negative late last week, making fresh stimulus vital to economic recovery.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 213,347 to 16,412,794 on Sunday. On Saturday, the number of new cases had risen by 268,668. The daily increase was lower than Saturday’s rise and 246,207 new cases from the previous Sunday.

Germany, Italy, and Spain reported 663 new cases on Sunday, which was up from 646 new cases on Saturday. On the previous Sunday, 491 new cases had been reported.

From the U.S, the total number of cases rose by 56,130 to 4,371,839 on Sunday. On Saturday, the total number of cases had increased by 67,398. On Sunday, 26th July, a total of 65,368 new cases had been reported.

The Majors

At the time of writing, the Japanese Yen was up by 0.40% to ¥105.72 against the U.S Dollar. The Aussie Dollar was up by 0.28% to $0.7125, with the Kiwi Dollar up by 0.41% to $0.6668.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Key stats include July’s IFO Business Climate Index figures for Germany.

Expect the EUR to respond to the figures, with forecasts pointing to a slight pullback amidst the spike in new COVID-19 cases.

Away from the economic calendar, chatter from Beijing and Washington and COVID-19 figures will also influence.

From Brussels, the progress of the EU Recovery Fund will also be in focus.

At the time of writing, the EUR was up by 0.33% to $1.1695.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will leave the Pound in the hands of Brexit and market risk sentiment.

At the time of writing, the Pound was up by 0.29% to $1.2831.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. June’s durable goods and core durable goods orders are due out later in the day.

While we can expect market reaction to the numbers, the U.S stimulus package, COVID-19, China, and Trump will remain the key drivers.

At the time of writing, the Dollar Spot Index was down by 0.38% to 94.079.

For the Loonie

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will continue to leave the Loonie in the hands of market risk appetite.

At the time of writing, the Loonie was up by 0.19% to C$1.3390 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – Geopolitics, the FED, Economic Data, and COVID-19 in Focus

On the Macro

It’s a busier week ahead on the economic calendar, with 57 stats in focus in the week ending 31st July. In the week prior, just 41 stats had been in focus.

For the Dollar:

It’s a busy week ahead on the economic data front.

In the 1st half of the week, June’s durable and core durable goods orders are due out along with July consumer confidence figures.

Expect consumer confidence to be the key driver, however. The figures will indicate sentiment towards the spike in new COVID-19 cases and unemployment.

The focus will then shift to 2nd quarter GDP numbers and the weekly initial jobless claims figures on Thursday.

With the markets expecting the worst on the GDP front, the weekly jobless claims will need to drop to sub-1.3m levels.

At the end of the week, inflation, personal spending, and finalized consumer sentiment figures will also draw attention.

On the monetary policy front, the FED delivers its July monetary policy decision on Wednesday. While no rate cut is expected, the markets will want the assurance of more support and perhaps some adjustments to its asset purchasing program. The press conference will garner plenty of attention.

The Dollar Spot Index ended the week down by 1.57% to 94.435.

For the EUR:

It’s also a busy week ahead on the economic data front.

At the start of the week, July’s IFO Business Climate Index figures are due out of Germany.

We may see some resilience in the EUR and the European majors, however, as progress is made with the EU Recovery Fund.

The focus will then shift to the 2nd half of the week.

On Thursday, 2nd quarter GDP and July unemployment figures are due out of Germany.

At the end of the week, French 2nd quarter GDP numbers and June consumer spending figures are in focus.

Expect prelim July inflation figures from member states and the Eurozone to have a muted impact.

Following the agreement on the mechanics of the EU Recovery Fund. Progress will need to be made in the coming weeks to support the EUR at its current levels.

The EUR/USD ended the week up by 2.00% to $1.1656.

For the Pound:

It’s a particularly quiet week ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will leave the Pound firmly in the hand of Brexit and trade talks.

The GBP/USD ended the week up by 1.80% to $1.2794.

For the Loonie:

It’s a relatively quiet week ahead on the economic calendar.

The markets will need to wait until Friday for May GDP and June RMPI figures.

While we expect some sensitivity to the numbers, U.S fiscal policy measures and COVID-19 updates will remain a key driver.

One curveball continues to be the ongoing spat between the U.S and China…

The Loonie ended the week up by 1.22% to C$1.3415 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively busy week ahead for the Aussie Dollar.

2nd quarter inflation and wholesale inflation figures are due out on Wednesday and Friday.

We don’t expect the numbers to have a lasting impact on the Aussie Dollar, however.

June’s private sector credit figures, also due out on Friday, will likely be brushed aside.

2nd quarter GDP figures from key economies, COVID-19 news, and geopolitics will remain the key drivers. A jump in new COVID-19 cases and deteriorating relations with China would likely test support for the Aussie Dollar.

The Aussie Dollar ended the week up by 1.56% to $0.7105.

For the Kiwi Dollar:

It’s another quiet week ahead on the economic calendar.

After a quiet start to the week, building consent and business confidence figures are due out on Thursday.

Expect the ANZ Business Confidence figures to have a greater influence on the Kiwi.

Away from the numbers, private sector PMIs from China, COVID-19, and geopolitics will remain in focus.

The Kiwi Dollar ended the week up by 1.28% to $0.6641.

For the Japanese Yen:

It is a quiet week ahead on the economic calendar.

June retail sales figures, due out on Thursday, and industrial production numbers on Friday are the key stats for the week.

We would expect the Yen to brush aside the stats, however, with the market focus elsewhere.

Progress towards a COVID-19 vaccine would pin back any upside in the Yen. Support could come from the U.S administration, however.

There’s the spat with China and the U.S fiscal stimulus package to track.

The Japanese Yen ended the week up by 0.82% to ¥106.14 against the U.S Dollar.

Out of China

It’s a quiet week ahead on the economic data front.

July’s private sector PMIs are due out on Friday. Expect the figures to influence risk appetite at the end of the week.

Away from the economic calendar, any chatter from Beijing will also need consideration.

The Chinese Yuan ended the week down 0.37% to CNY7.0184 against the U.S Dollar.

Geo-Politics

UK Politics:

Brexit will remain in focus in the week. Both sides agreed to continue negotiations through to September, which has bought Boris and the Pound some time.

With Germany having made it clear that they will focus on talks in September and October, however, it might be a slow summer.

U.S Politics:

It was quite a week for Trump and the Republicans last week. Expect more of the same in the week ahead.

First on the agenda will be to get the next fiscal stimulus package wrapped up. With benefits expiring at the end of the month, failure to deliver the next phase would be a blow to Trump’s hopes of a 2nd term.

Then we have the spat with China to consider and there’s the continued rise in new COVID-19 cases.

Corporate Earnings

Out of Germany, Deutsche Bank (Wed) is the marquee name delivering earnings results.

From France, LVMH (Mon), Peugeot (Tues), Total (Thurs), Airbus Grp (Thurs), Renault (Thurs), BNP Paribas (Fri), and Air France KLM (Fri) are key names delivering results.

The Coronavirus:

It was another bad week, with the number of new COVID-19 cases continuing to rise at a marked pace.

From the market’s perspective, the 3 key considerations have been:

  1. Progress is made with COVID-19 treatment drugs and vaccines.
  2. No spikes in new cases as a result of the easing of lockdown measures.
  3. Governments continue to progress towards fully opening economies and borders.

Last week, we saw positive news of progress towards a vaccine deliver support to riskier assets early in the week. This will need to continue in the week ahead to offset the negative impacts of points ii) and iii).

At the time of writing, the total number of coronavirus cases stood at 16,199,447. Monday to Saturday, the total number of new cases increased by 1,531,149. Over the same period in the previous week, the total number had risen by 1,385,504.

Monday through Saturday, the U.S reported 417,070 new cases to take the total to 4,315,709. This was down marginally from the previous week’s 419,276.

For Germany, Italy, and Spain, there were 17,083 new cases Monday through Saturday. This took the total to 771,697. In the previous week, there had been 10,124 cases over the same period. Spain accounted for 12,166 of the total new cases… With EU member states reopening borders, the chances of a 2nd wave across the EU will be on the rise.

Over the weekend, Reuters had reported a record rise in new COVID-19 cases in almost 40 countries last week.

The Weekly Wrap – COVID-19, Geopolitics, and Economic Data Drove the Majors

The Stats

It was a quieter week on the economic calendar, in the week ending 24th July.

A total of just 41 stats were monitored, following the 74 stats from the week prior.

Of the 41 stats, 23 came in ahead forecasts, with 17 economic indicators coming up short of forecasts. Just 1 stat was in line with forecasts in the week.

Looking at the numbers, 33 of the stats reflected an upward trend from previous figures. Of the remaining 8, 7 stats reflected a deterioration from previous.

For the Greenback, it was a 5th consecutive week in the red. In the week ending 24th July, the Dollar Spot Index fell by 1.57% to 94.435. In the week prior, the Dollar had fallen by 0.73%.

For the U.S, the Dollar was on the back foot throughout the week. News of progress towards a COVID-19 vaccine weighed on the Dollar in the early part of the week.

Domestic issues will have also tested demand for the Dollar, however. News of the U.S administration sending Federal agents to control protests tested the Dollar. Rising tension between the U.S and China didn’t help as Trump looked to distract voters from the continued spike in new COVID-19 cases.

Looking at the latest coronavirus numbers

At the time of writing, the total number of coronavirus cases stood at 15,930,779 for Friday, rising from last Friday’s 14,189,223 total cases. Week-on-week (Saturday thru Friday), the total number of cases was up by 1,741,556 on a global basis. This was higher than the previous week’s increase of 1,584,328 in new cases.

In the U.S, the total rose by 478,299 to 4,248,311. In the week prior, the total number of new cases had risen by 484,462.

Across Germany, Italy, and Spain combined, the total number of new cases increased by 17,404 to bring total infections to 771,051. In the previous week, the total number of new cases had risen by 10,432. Spain continued to see larger rises over the week.

Out of the U.S

It was another relatively quiet week on the economic data front.

Key stats included the weekly jobless claims figures and July’s private sector PMI numbers.

In the week ending 17th July, jobless claims rose by 1.416m following 1.3m from the previous week. It was yet more evidence that the economic recovery has more speed bumps to come.

Private sector PMIs also failed to impress. While manifesting sector activity returned to expansion in July, the services sector continued to contract.

With the stats on the negative, the Dollar was on the slide for the wrong reasons.

Rising tensions between the U.S and China, the use of Federal agents, and COVID-19 also weighed on the Greenback.

In the equity markets, the NASDAQ fell by 1.33%, with the Dow and S&P500 declining by 0.76% and 0.28% respectively.

Out of the UK

It was another busy week on the economic calendar.

Key stats included June retail sales and prelim private sector PMI numbers.

The stats were skewed to the positive for the Pound.

In June, retail sales surged by 13.9%, month-on-month, with core retail sales jumping by 13.5%.

A 2nd consecutive monthly jump saw sales return to pre-COVID-19 levels.

Private sector activity also impressed. According to prelim figures, the all-important services PMI jumped from 47.1 to 56.6.  With the Manufacturing PMI rising from 50.1 to 53.6, the composite increased from 47.7 to 57.1.

The only negative for the Pound was weaker than expected recovery in industrial trend orders. In July, industrial trend orders rose from -58 to -46. Economists had forecast a rise to -38.

Away from the economic calendar, the Pound also found support in the week. A combination of improved economic indicators and positive progress on trade talks delivered the upside.

In the week, the Pound rallied by 1.80% to $1.2794 in the week, reversing a 0.43% loss from the previous week. The FTSE100 ended the week down by 2.65%, partially reversing a 3.20% gain from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

Key stats included German and Eurozone consumer confidence figures and prelim private sector PMIs.

The stats were skewed to the positive.

While the consumer confidence slipped in the Eurozone, confidence in Germany improved in August.

More importantly, private sector activity continued to see a pickup in activity in July.

The Eurozone’s Services PMI jumped from 48.3 to 55.1, with the Manufacturing PMI rising from 47.4 to 51.1.

Supported by a marked pickup in service sector activity in both France and Germany, the Eurozone Composite rose from 48.5 to 54.8.

On the geopolitical risk front, rising tension between the U.S and China was EUR negative.

At the start of the week, agreement on the mechanism of the EU Recovery Fund delivered a boost, however.

For the week, the EUR rallied by 2.00% to $1.1656, following a 1.13% gain from the previous week.

For the European major indexes, it was a bearish week. The CAC30 and EuroStoxx600 slid by 2.23% and 1.45% respectively, while the DAX40 slipped by 0.63%.

For the Loonie

It was a relatively busy week on the economic calendar.

Economic data included May retail sales and June inflation figures.

Retail sales bounced back from April’s slump, with inflationary pressures picking up in June.

Crude oil prices also headed northwards in the week, providing the Loonie with support.

The Loonie rose by 1.22% to end the week at C$1.3415 against the Greenback. In the week prior, the Loonie had risen by 0.09% to C$1.3415.

Elsewhere

It was a bullish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 24th July, the Aussie Dollar rose by 1.56% to $0.7105, with the Kiwi Dollar gaining 1.28% to $0.6641.

For the Aussie Dollar

It was a relatively quiet week for the Aussie Dollar.

Retail sales figures disappointed on Wednesday, in spite of a 2.40% rise off the back of a 16.9% surge in May. Economists had forecast a 7.1% gain.

Also negative was a fall in business confidence. In the second quarter, the NAB Quarterly Business Confidence fell from -12 to -15, which was to be expected. The decline reflected the impact of the COVID-19 pandemic on the business sentiment.

On the monetary policy front, the RBA meeting minutes provided few surprises.

The upside in the week came as a result of the news of progress towards a COVID-19 vaccine. Even rising tensions between the U.S and China failed to send the Aussie into reverse.

For the Kiwi Dollar

It was another relatively quiet week on the economic data front.

Key stats were limited to June trade figures.

A rise in exports and little movement in imports led to a narrowing of the trade deficit in June. The stats ultimately had a muted impact on the Kiwi Dollar, however, with geopolitics in focus on Friday.

Tracking the Aussie Dollar, hopes of a COVID-19 vaccine to boost the global economy supported the Kiwi.

For the Japanese Yen

It was a busy first half of the week on the data front, with Japan on holiday on Thursday and Friday.

June trade figures and July’s prelim private sector PMIs were in focus in the week.

The stats were mixed. In June, exports slid by 26.2%, following a 28.3% tumble in May. A more marked decline in imports, however, led to a narrowing of the trade deficit to ¥268.8bn.

From the private sector, both the manufacturing and services sectors reported a slower pace of contraction. It was of little consolation, however, with the rises in the PMIs only marginal.

The Manufacturing PMI rose from 40.1 to 42.6, with the Services PMI rising from 45.0 to 45.2.

Over the week, the stats had a muted impact on the Japanese Yen, however.

A weakening U.S Dollar stemming from the progress towards a COVID-19 vaccine supported the Yen.

The Japanese Yen rose by 0.82% to end the week at ¥106.14 against the Greenback. In the week prior, the Yen had fallen by 0.08%.

Out of China

It was a quiet week on the economic data front.

There were no material stats to provide the markets with direction.

On the monetary policy front, the PBoC left the 3-year and 5-year loan prime rates unchanged. This was in line with expectations, with the PBoC having pre-warned the markets of the likely end to policy easing near-term.

Over the week, rising tensions between the U.S and China weighed on the Yuan.

In the week ending 24th July, the Chinese Yuan fell by 0.37% to CNY7.0184 against the Dollar. In the week prior, the Yuan had gained 0.10%.

The CSI300 declined by 0.86% in the week, with the Hang Seng falling 1.53%, as U.S – China tensions weighed once more.

AUD/USD and NZD/USD Fundamental Daily Forecast – Pressured by US-China Hostilities, but Holding Weekly Gains

The Australian and New Zealand Dollars are trading lower on Friday amid a drop in global risk demand that is helping to increase the U.S. Dollar’s appeal as a safe-haven asset. The sell-off is being fueled by ramped up hostilities between economic powerhouses – the U.S. and China.

At 10:20 GMT, the AUD/USD is trading .7075, down 0.0021 or -0.30% and the NZD/USD is at .6623, down 0.0010 or -0.16%. Despite the weakness, the Forex pairs are likely to hold on to their weekly gains.

Escalating US-China Tensions

In response to the abrupt closure of its Chinese consulate in Houston, Texas earlier in the week by U.S. officials, China hit back on Friday by announcing it was ordering the closure of the U.S. consulate in Chengdu, China.

“The current situation between China and the United States is something China does not want to see, and the responsibility rests entirely with the United States,” the Chinese foreign ministry said in a statement Friday. “We once again urge the U.S. to immediately revoke the erroneous decision to create necessary conditions for the return of bilateral relations to normal.”

Australian Investors Unnerved by Deteriorating Relationship Between US and China

The Australian share market fell on Friday, erasing a week’s worth of gains. The losses were led by a plunge in technology stocks, following similar moves on Wall Street overnight.

Surge in COVID-19 Cases Raising Doubts About Economic Recovery

The country is experiencing an acceleration in the number of new infections in the last few weeks, many of those concentrated in Victoria state – home to the second-most populous city Melbourne. The resurgence in cases led authorities to reinstate a partial lockdown on Melbourne.

“The biggest predictor of the economic outlook is the number of COVID-19 cases and what that means for lockdown,” she told CNBC’s “Squawk Box Asia” before the government released its budget update.

She explained that the states of Victoria and neighboring New South Wales account for more than half of Australia’s GDP, so further lockdowns would have a really big impact” on the overall economy.

Daily Forecast

It’s going to take a major shift in global investor sentiment to turnaround the AUD/USD and NZD/USD on Friday. I think bullish investors are content with their positions so I don’t think they are going to be willing to chase the currencies higher. Some may even think it’s time to pull in some profits, which would limit gains. Others would like to see a steep break into a value zone so they could add to their long positions.

Look for a strong reaction to the U.S. Flash Manufacturing PMI and Flash Services PMI reports at 13:45 PMI. If there is going to be a major rebound on Friday, it will be triggered by these reports.

For a look at all of today’s economic events, check out our economic calendar.

Private Sector PMIs Put the EUR, Pound, and the Greenback in the Spotlight

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar. The Kiwi Dollar was in action in the early part of the day.

Away from the economic calendar, disappointing economic data from the U.S on Thursday and U.S – China tensions tested market risk appetite early.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 270,301 to 15,650,441 on Thursday. On Wednesday, the number of new cases had risen by 288,688. The daily increase was lower than Wednesday’s rise while up from 238,925 new cases from the previous Thursday.

Germany, Italy, and Spain reported 3,593 new cases on Thursday, which was up from 2,217 new cases on Wednesday. On the previous Thursday, 2,175 new cases had been reported.

From the U.S, the total number of cases rose by 69,116 to 4,169,991 on Thursday. On Wednesday, the total number of cases had increased by 72,306. On Thursday, 23rd July, a total of 76,953 new cases had been reported.

The Kiwi Dollar

New Zealand’s June trade figures were in focus.

According to NZ Stats,

  • Goods exports increased by NZ$107m (2.2%) to NZ$5.1bn in June, compared with June 2019.
    • Rising exports to the U.S and the EU offset falling exports to Australia, China, and Japan.
  • Imports were little changed, rising by just NZ$11m (0.2%) to NZ$4.6bn.
  • Year-on-year, the trade deficit narrowed from NZ$1,290m to NZ$1,200m.
  • The monthly trade surplus stood at NZ$426m. In May, the surplus had stood at NZ$1,286m.

The Kiwi Dollar moved from $0.66353 to $0.66387 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.14% to $0.6644.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.33% to ¥106.51 against the U.S Dollar, with the Aussie Dollar up by 0.23% to $0.7114.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Key stats include July’s prelim private sector PMI numbers for France, Germany, and the Eurozone.

Expect service sector PMIs and the Eurozone’s composite to be the key drivers on the day. The ECB is looking for a consumption-driven economic rebound, putting service sector activity front and center.

Away from the calendar, chatter from Washington and Beijing, and updates on COVID-19 will also influence.

At the time of writing, the EUR was up by 0.15% to $1.1613.

For the Pound

It’s a relatively busy day ahead on the economic calendar. July’s prelim private sector PMIs are due out later this morning.

Expect the services PMI to have the greatest impact on the Pound.

Away from the economic calendar, Brexit and updates on trade negotiations with other key trade partners will continue to influence.

At the time of writing, the Pound was up by 0.09% to $1.2753.

Across the Pond

It’s also a relatively busy day ahead for the U.S Dollar. July’s prelim private sector PMIs are also due out of the U.S.

Expect the markets to be particularly sensitive to the services PMI.

Away from the calendar, Trump, geopolitics, and COVID-19 will remain key areas of focus.

At the time of writing, the Dollar Spot Index was down by 0.05% to 94.646.

For the Loonie

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will continue to leave the Loonie in the hands of market risk appetite.

At the time of writing, the Loonie was up by 0.11% to C$1.3395 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

NZD/USD Forex Technical Analysis – Close Below .6662 Forms Potentially Bearish Closing Price Reversal Top

The New Zealand Dollar is edging higher in a choppy trade early Thursday. Traders are monitoring U.S.-China trade relations because an escalation of the tensions could derail the current rally amid increased demand for the U.S. Dollar.

Appetite for riskier assets has improved greatly this week as progress in developing vaccines for the novel coronavirus reduced the U.S. Dollar’s safe-harbor appeal. The greenback is being further pressured by expectations of a massive amount of fiscal spending to support the U.S. economy.

At 06:25 GMT, the NZD/USD is trading .6683, up 0.0021 or +0.31%.

On Thursday, traders will have the opportunity to react to a report on U.S. Weekly Unemployment Claims. They want to see if the surge in coronavirus cases is having an impact on the U.S. labor market.

Early Friday, the focus will be on the New Zealand Trade Balance report. It is supposed to shrink from 1253M to 450M.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6690 will signal a resumption of the uptrend.

The main trend will change to down on a move through .6503. This is highly unlikely, however, today is the seventh day up from the last main bottom, which puts the NZD/USD inside the window of time for a potentially bearish closing price reversal top.

The current moving minor range is .6503 to .6690. Its retracement zone at .6596 to .6574 is potential support. This zone will move up as the Forex pair moves higher.

Daily Swing Chart Technical Forecast

Given the prolonged move up in terms of price and time, the direction of the NZD/USD the rest of the session on Thursday is likely to be determined by trader reaction to .6662.

Bullish Scenario

A sustained move over .6662 will indicate the presence of buyers. Taking out the .6690 high will indicate the buying is getting stronger. If this is able to generate enough upside momentum then we could see a further surge into a pair of multi-year tops at .6758 and .6791.

Bearish Scenario

A sustained move under .6662 will signal the presence of sellers. This will also indicate the selling is greater than the buying at current price levels.

A close under this level will form a closing price reversal top. If confirmed, this could trigger a 2 to 3 day correction into at least .6596 to .6574.

Economic Data, Geopolitics, and U.S Stimulus Progress in Focus

Earlier in the Day:

It’s a quiet start to the day on the economic calendar. There are no material stats to provide the markets with direction in the early part of the day.

A lack of stats will leave the markets to consider rising tensions between the U.S and China. Progress towards a COVID-19 vaccine and U.S fiscal stimulus talks also need consideration.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 221,985 to 15,313,437 on Wednesday. On Tuesday, the number of new cases had risen by 240,565. The daily increase was lower than Tuesday’s rise and 242,529 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 2,214 new cases on Wednesday, which was up from 1,889 new cases on Tuesday. On the previous Wednesday, 1,523 new cases had been reported. Spain was the main contributor to the uptick in new cases for a 3rd consecutive day.

From the U.S, the total number of cases rose by 48,152 to 4,076,721 on Wednesday. On Tuesday, the total number of cases had increased by 67,140. On Wednesday, 22nd July, a total of 71,670 new cases had been reported.

Majors

At the time of writing, the Japanese Yen was down by 0.01% to ¥107.16 against the U.S Dollar. The Kiwi Dollar was down by 0.05% to $0.6659, with the Aussie Dollar down by 0.03% to $0.7138.

The Day Ahead:

For the EUR

It’s a relatively busy day ahead on the economic calendar. Key stats include Germany’s GfK Consumer Climate figures for August and the Eurozone’s consumer confidence figures for July.

Consumer confidence is key to the economic recovery within the region. While any weakness would be EUR negative, progress with the EU Recovery Fund should ease any market angst.

From the U.S, rising tensions between the U.S and China and fiscal stimulus also need consideration on the day.

At the time of writing, the EUR was flat at $1.1570.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. CBI industrial trend order figures for July are due out later today.

While the figures will influence, Brexit and trade negotiations with key trading partners will continue to remain the key drivers.

At the time of writing, the Pound was up by 0.01% to $1.2735.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar. The weekly jobless claims figures are due out later today.

Following a 1.3m jump in the week ending 10th July, the markets will be looking for a sub-1m rise in claims. With the 2nd wave hitting the U.S, however, any jump from the previous 1.3m will test market risk sentiment.

Away from the numbers, rising tension between the U.S and China, fiscal stimulus, and COVID-19 vaccine news influence.

On Wednesday, the Dollar Spot Index fell by 0.14% to 94.988, with fiscal stimulus talk easing demand for the Greenback.

For the Loonie

It’s a quiet day ahead on the economic calendar. Following a relatively busy start to the week, there are no major stats due out of Canada later today.

A lack of stats will leave the Loonie in the hands of market risk appetite and crude oil prices.

At the time of writing, the Loonie was up by 0.02% to C$1.3414 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Fiscal Policy, Geopolitics, and COVID-19 to Test the Markets

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar. The Japanese Yen was back in action in the early part of the day.

Away from the economic calendar, riskier assets struggled. The deployment of agents by the U.S administration and the continued rise in COVID-19 cases tested the markets early on.

Looking at the latest coronavirus numbers

On Tuesday, the number of new coronavirus cases rose by 240,565 to 15,091,452. On Monday, the number of new cases had risen by 182,589. The daily increase was higher than Monday’s rise and 218,739 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 1,889 new cases on Tuesday, which was down from 5,413 new cases on Monday. On the previous Tuesday, 1,110 new cases had been reported.

From the U.S, the total number of cases rose by 67,140 to 4,028,569 on Tuesday. On Monday, the total number of cases had increased by 62,790. On Tuesday, 21st July, a total of 65,594 new cases had been reported.

For the Japanese Yen

Prelim July private sector PMIs were in focus in the early part of the day.

July’s manufacturing PMI rose from 40.1 to 42.6 according to prelim figures. The services PMI increased from 45.0 to 45.2. Economists had forecast PMIs of 42.4 and 47.2 respectively.

According to the prelim survey,

Manufacturing:

  • Production and new orders continued to fall at substantial rates, albeit slower than in June.
  • The rate of decline in employment accelerated further.
  • Japanese goods producers continued to reduce both purchasing activity and inventories.

Services:

  • New business inflows contracted at a slower pace than in June.
  • The amount of incomplete work declined further, indicating further development of spare capacity.
  • Service sector employment fell for a 5th consecutive month.

The Japanese Yen moved from ¥106.858 to ¥106.882 upon release of the stats. At the time of writing, the Japanese Yen was down by 0.02% to ¥106.82 against the U.S Dollar.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.03% to $0.6641, while the Aussie Dollar was up by 0.03% to $0.7130.

The Day Ahead:

For the EUR

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

The lack of stats will leave the EUR in the hands of market sentiment towards the EU Recovery Fund. The markets will also need to monitor chatter from Capitol Hill.

Now that EU member states have reached an agreement, the focus will return to COVID-19 news and the near-term economic outlook. Support from the Recovery Fund will now likely drive hopes of a speedier economic rebound.

At the time of writing, the EUR was up by 0.06% to $1.1534.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

Brexit and trade negotiations with key trading partners will remain the main drivers.

At the time of writing, the Pound was down by 0.03% to $1.2727.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar. June existing-home sales figures are due out later today.

The numbers are unlikely to have too much impact on the risk appetite, with U.S fiscal policy back in focus.

COVID-19 numbers and the U.S administration’s decision to deploy agents will need close monitoring.

At the time of writing, the Dollar Spot Index was flat at 95.119

For the Loonie

It’s another busy day ahead on the economic calendar. June inflation figures are due out later today.

While inflation is a key consideration, expect the Loonie to brush aside the numbers. Progress towards a COVID-19 vaccine and expectations of more fiscal stimulus will influence on the day.

At the time of writing, the Loonie was up by 0.05% to C$1.3452 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

NZD/USD Forex Technical Analysis – Risk Sentiment Manipulating Price Action

The New Zealand Dollar is inching lower early Tuesday in a meaningless move probably related to nervous investors trimming long positions. Yesterday, the currency was supported by demand for higher risk assets as progress toward both a coronavirus vaccine and a fiscal rescue package in Europe put the U.S. Dollar under pressure.

At 04:37 GMT, the NZD/USD is trading .6564, down 0.0012 or -0.18%.

Fundamentally, encouraging data from trials of three potential COVID-19 vaccines supported sentiment on Monday and weighed broadly on the safe-have greenback. Meanwhile, speculators feel that an agreement in Europe on the economic recovery fund will improve the global economic outlook while increasing demand for commodity-linked currencies.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6601 will signal a resumption of the uptrend. The main trend will change to down on a move through .6503.

The minor trend is also up. A trade through .6528 will change the minor trend to down. This will also shift momentum to the downside. Earlier today, the NZD/USD took out the minor top at .6584, but move back under it.

The minor range is .6601 to .6503. Its 50% level or pivot at .6552 is support. This level is controlling the near-term direction of the NZD/USD.

The short-term range is .6381 to .6601. Its 50% level at .6491 is also potential support. But it’s also the trigger point for a potential acceleration to the downside.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at .6564, the direction of the NZD/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the pivot at .6552.

Bullish Scenario

A sustained move over .6552 will indicate the presence of buyers. This could lead to a retest of the intraday high at .6589, followed by the main top at .6601. Taking out this level is likely to trigger an acceleration to the upside with the next major targets .6758 and .6791.

Bearish Scenario

A sustained move under .6552 will signal the presence of sellers. If this creates enough downside momentum then look for the selling pressure to possibly extend into the main bottom at .6503, followed by the short-term 50% level at .6491.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the Loonie in Focus, as COVID-19 News Supports Riskier Assets

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar. The Japanese Yen was back in action along with the Aussie Dollar.

Away from the economic calendar, riskier assets found early support on news of further progress towards a COVID-19 vaccine.

Looking at the latest coronavirus numbers

On Monday, the number of new coronavirus cases rose by 182,589 to 14,850,887. On Sunday, the number of new cases had risen by 246,207. The daily increase was lower than Saturday’s rise and 199,164 new cases from the previous Monday.

Germany, Italy, and Spain reported 5,413 new cases on Monday, which was up from 491 new cases on Sunday. On the previous Monday, just 2,700 new cases had been reported.

From the U.S, the total number of cases rose by 62,790 to 3,961,429 on Monday. On Sunday, the total number of cases had increased by 65,368. On Monday, 20th July, a total of 65,488 new cases had been reported.

For the Japanese Yen

In June, core consumer prices remained unchanged compared with June 2019. Economists had forecast a 0.1% decline.

According to figures released by the Ministry of Internal Affairs and Communication., the annual rate of inflation held steady at 0.1%.

The Japanese Yen moved from ¥107.243 to ¥107.231 upon release of the minutes and stats. At the time of writing, the Japanese Yen was up by 0.07% to ¥107.19 against the U.S Dollar.

For the Aussie Dollar

The RBA Meeting Minutes were in focus in the late part of the Asian session.

Salient points from the minutes included:

  • Timely indicators of economic activity had generally picked up, suggesting that the worst had passed.
  • Uncertainty over the economic outlook remained, however, with the outlook hinged on containment of the virus.
  • Members noted that there had been a pickup in consumer spending, though uncertainty over the outlook on spending remained.
  • It was likely that fiscal and monetary support would be required for some time.
  • The Board remained committed to supporting jobs, incomes, and businesses and to make sure that Australia is well placed for recovery.

The Aussie Dollar moved from $0.70267 to $0.70217 upon the release of the minutes. At the time of writing, the Aussie Dollar was up by 0.11% to $0.7024.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.02% to $0.6576.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

The lack of stats will leave the EUR in the hands of updates from the EU Recovery Fund talks and market risk sentiment.

While the EU Recovery Fund would be a boost for the struggling economies of Italy and Spain, the coronavirus remains a threat. Progress towards a COVID-19 vaccine, however, has continued to ease market jitters over the virus.

At the time of writing, the EUR was up by 0.10% to $1.1459.

For the Pound

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

Brexit remains in focus and will continue to limit any upside in the Pound, barring the announcement of an agreement on trade.

At the time of writing, the Pound was up by 0.11% to $1.2675.

Across the Pond

It’s also a particularly quiet day ahead for the U.S Dollar. There are no material stats due out to provide the Greenback with direction.

A lack of stats will leave the Dollar in the hands of updates on COVID-19 and chatter from Washington.

At the time of writing, the Dollar Spot Index was down by 0.13% to 95.705.

For the Loonie

It’s a busier day ahead on the economic calendar. May retail sales and June new house price figures are due out of Canada later today.

Barring a “risk-off” event, we would expect the retail sales figures to have the greatest impact.

The markets will be looking for a rebound from April’s tumble.

Away from the stats, any rise in tension between the U.S and China will need consideration along with COVID-19 updates.

At the time of writing, the Loonie was up by 0.13% to C$1.3518 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Geopolitics and COVID-19 Put the EUR, Pound and the Greenback in Focus

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar. The Japanese Yen and the PBoC were in action in the early part of the day.

Away from the economic calendar, riskier assets continued to struggle as COVID-19 and geopolitical risks weighed.

Looking at the latest coronavirus numbers

On Sunday, the number of new coronavirus cases rose by 219,728 to 14,641,819, according to figures at the time of writing. On Saturday, the number of new cases had risen by 232,868. The daily increase was lower than Saturday’s rise while up from 194,475 new cases from the previous Sunday.

Germany, Italy, and Spain reported 491 new cases on Sunday, which was up from 476 new cases on Saturday. On the previous Sunday, just 372 new cases had been reported.

From the U.S, the total number of cases rose by 65,279 to 3,898,550 on Sunday. On Saturday, the total number of cases had increased by 63,259. On Sunday, 19th July, a total of 58,349 new cases had been reported.

For the Japanese Yen

Japan’s trade deficit narrowed from ¥838.2bn to ¥268.8bn in June. Economists had forecast a narrowing to ¥35.8bn.

According to figures released by the  Ministry of Finance,

  • Exports tumbled by a further 26.2% in June, following on from a 28.3% slump in May. Economists had forecast a 24.9% fall.
    • Exports to Asia fell by 15.3%, to Western Europe by 30.0%, and by 46.6% to the U.S.
    • Japan’s exports to China fell by a modest 0.2% when compared with June 2019.
  • Imports slid by 14.4% in June, following a 26.2% slump in May. Economists had forecast a 16.8% slide.
    • Imports from HK tumbled by 77.5%, by 12.6% from the U.S, by 22% from Australia, and by 10.9% from Western Europe.

The Japanese Yen moved from ¥107.067 to ¥107.092 upon release of the minutes and stats. At the time of writing, the Japanese Yen was down by 0.33% to ¥107.37 against the U.S Dollar.

Out of China

The PBoC left the 5-year loan prime rate unchanged at 4.65%, with the 3-year left unchanged at 3.85%. The hold was in line with market expectations and the PBoC’s recent forward guidance.

Some may have hoped for further support following the disappointing June retail sales figures for last week. Ultimately, the economic rebound in the 2nd quarter was good enough to allow the PBoC to leave rates unchanged.

The Aussie Dollar moved from $0.69824 to $0.69776 upon the announcement. At the time of writing, the Aussie Dollar was down by 0.20% to $0.6982.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.17% to $0.6546.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats include June wholesale inflation figures for Germany.

The stats are unlikely to have an impact on the EUR, however, as the markets look for updates from Brussels. EU Recovery Fund talks extended into the weekend but failed to result in an agreement. The EUR will likely come under pressure if progress is not made today.

At the time of writing, the EUR was down by 0.08% to $1.1419.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will leave the Pound in the hands of Brexit and market risk sentiment on the day. There was nothing positive from the weekend, on the Brexit front, to provide the Pound with support.

At the time of writing, the Pound was down by 0.34% to $1.2525.

Across the Pond

It’s also a particularly quiet day ahead for the U.S Dollar. There are no material stats due out to provide the Greenback with direction.

A lack of stats will leave the Dollar in the hands of updates on COVID-19 and chatter from Washington.

At the time of writing, the Dollar Spot Index was up by 0.22% to 96.152.

For the Loonie

It’s a quiet day ahead on the economic calendar. There are no material stats due out, which will leave the Loonie in the hands of market risk sentiment on the day.

COVID-19 and U.S-China tensions will be the key areas of focus.

At the time of writing, the Loonie was down by 0.04% to C$1.3586 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Weekly Forecast – Weak AUD Jobs Data, NZ Inflation Raise Red Flags

A mixed response to ever-changing risk sentiment and economic data helped drive a two-sided finish in the Australian and New Zealand Dollars last week. In Australia, it was an inconclusive employment report that raised some flags about the economy. Meanwhile, another weak quarterly New Zealand CPI report increased the chances of a recession.

Last week, the AUD/USD settled at .6996, up 0.0049 or +0.70% and the NZD/USD closed at .6556, down 0.0016 or -0.24%.

Australia Unemployment Hits 22-year High Though Jobs Surge

Australia’s jobless rate edged up even though employment surged by a record in June, as more people searched for work encouraged by the re-opening of the economy from the coronavirus lockdown.

Employment rose by a blockbuster 210,800 in June following hefty declines in April and May, Australian Bureau of Statistics (ABS) data showed last Thursday. That handily beat forecasts for a gain of 112,000 in a Reuters poll.

Yet, the jobless rate still hit a 22-year high of 7.4% because the surge in jobs growth was not enough to offset the increase in the number of people who went looking for work. The participation rate in June rose by 1.3 percentage points to 64%, the highest since April, driving unemployment higher.

The number of unemployed people increased by 69,300 to 992, 300 in June – around a third more than the jobless numbers during the 2008 global financial crisis.

NZ June Quarter CPI Data Raises Spector of Deflation

Low oil prices drove New Zealand’s consumer price inflation down by 0.5 percent over the June quarter, making for a 1.5 percent gain over the year, and raising the possibility of deflation further out.

The quarterly drop in the consumer price index (CPI) was in line with market expectations.

Stats NZ said transport costs fell by 4.9 percent over the quarter, influenced by lower prices for petrol (down 12 percent).

Weekly Forecast

Aussie and Kiwi traders are likely to continue to follow the choppy trade in global equity markets since there are still many traders who believe the global economy is on a path to a quick recovery despite the surge in coronavirus cases in the United States and globally.

However, last week’s Australian jobs data and New Zealand’s CPI data did reveal that there are a few cracks in the economy and that the road to recovery may not be that easy after all.

After the release of the Aussie jobs report, economists said the jobless rate would have been even higher at well above 11% were it not for a government wage subsidy scheme – ‘JobKeeper’-that allowed businesses to keep staff on their payrolls even though they worked zero hours.

With the government support soon expected to be withdrawn, economists expect the jobless rates to remain elevated for some time.

In New Zealand, economists fear deflation because falling prices lead to lower consumer spending, which is a big part of economic growth. Companies respond to falling prices by slowing down their production, which leads to layoffs and salary reductions.

From the Reserve Bank’s (RBNZ) perspective, it’s not inflation pressures today, but inflation pressures over 2021 that the Reserve Bank will be most concerned about – as inflation is a lagging economic variable, ASB Bank said.

“Deflation risks cannot be ruled out, which will make the RBNZ nervous given the limited effectiveness of the OCR, which is now stuck at its operational lower bound,” ASB economists said in a commentary.

“For now, it appears the economy has recovered from lockdown faster than expected.”

The key is how well activity and confidence hold up over the rest of the year as the labor market weakens, sending unemployment higher and weighing on wage growth.

For a look at all of today’s economic events, check out our economic calendar.

NZD/USD Forex Technical Analysis – Strengthens Over .6552, Weakens Under .6491

The New Zealand Dollar managed to eke out a small gain on Friday as traders shrugged off coronavirus news, while maintaining their focus on increased demand for risky commodity-linked assets. A weaker U.S. Dollar and falling U.S. Treasury yields also helped underpin the Kiwi.

The Forex pair traded in a narrow range on low volume, while posting an inside move that typically indicates investor indecision and impending volatility.

On Friday, the NZD/USD settled at .6556, up 0.0020 or +0.30%.

The Forex pair was also underpinned by a jump in the BusinessNZ Manufacturing Index from 39.8 to 56.3, putting the manufacturing sector back into expansion after spending several months in contraction.

Support was also generated by weaker than expected U.S. economic news. Building Permits came in at 1.24M, higher than the previous report, but below the forecast. Preliminary University of Michigan Consumer Sentiment fell to 73.2, down from a revised 78.1. This was also below the estimate.

Daily NZD/USD

Daily Swing Chart Technical Analysis

Main Trend Technical Analysis

The main trend is up according to the daily swing chart. A trade through the last main top at .6601 will signal a resumption of the uptrend. There is no resistance above this level until the December 31, 2019 main top at .6758 and the July 19, 2019 main top at .6791.

The main trend will change to down on a trade through the last main bottom at .6385. This is followed closely by a pair of main bottoms at .6383 and .6381.

Minor Trend Technical Analysis

The minor trend is down. This is controlling the momentum. A trade through .6503 will indicate the selling pressure is getting stronger. The minor trend will change to up on a move through .6584.

Retracement Zone Analysis

The minor range is .6601 to .6503. Its 50% level or pivot at .6552 has been controlling the direction of the NZD/USD for several days. The week ended with the Forex pair straddling this level for three days.

The short-term range is .6381 to .6601. Its 50% level or pivot at .6491 is potential support. It’s also a potential trigger point for an acceleration to the downside.

Short-Term Outlook

Watch the price action and read the order flow at .6552 early next week. Trader reaction to this level could set the tone.

Look for a bullish tone to develop on a sustained move over .6552.

Weakness is likely to develop on a sustained move under .6552. If this is able to create enough downside momentum then look for a break into the minor bottom at .6503, followed by the 50% level at .6491.

The 50% level at .6491 is a potential trigger point for a steep break into the series of main bottoms at .6385, .6383 and .6381.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – COVID-19, Geopolitics and Private Sector PMIs in Focus

On the Macro

It’s a particularly quiet week ahead on the economic calendar, with just 39 stats in focus in the week ending 24th July. In the week prior, just 74 stats had been in focus.

For the Dollar:

It’s a quiet week ahead on the economic data front, giving the markets little to consider.

While the stats are on the quieter side, 2 data sets will have a material impact on market risk sentiment.

On Thursday, the weekly jobless claims are in focus, with the markets wanting a continuation of the downward trend. Sub-1.3m would be needed to ease any jitters over the 2nd wave.

The focus will then shift to prelim July private sector PMIs due out on Friday. Again, the services sector will need to return to expansion to support the market optimism over the economic outlook.

A deeper contraction and expect risk sentiment to be tested.

The Dollar Spot Index ended the week down by 0.73% to 95.942.

For the EUR:

It’s a busy week ahead on the economic calendar.

After a quiet start to the week, the Eurozone and Germany’s consumer confidence figures are in focus on Thursday.

In support of a speedier economic recovery, consumer confidence will need to continue improving. The ECB and governments are looking for a consumer-led recovery. A pullback in confidence will question the optimistic outlook.

The focus will then shift to Friday, with July’s prelim private sector PMIs due out of France, Germany, and the Eurozone.

While we do expect manufacturing PMIs to influence, expect plenty of interest in the service sector PMIs. New orders and employment will likely be two key areas of focus.

The EUR/USD ended the week up by 1.13% to $1.1428.

For the Pound:

It’s another busy week ahead on the economic calendar.

The markets will need to wait until Friday for the stats, however.

Key stats include June retail sales and July’s prelim private sector PMIs.

Expect both sets of numbers to drive the Pound.

Outside of the numbers, Brexit chatter and updates on trade negotiations will continue to influence.

The GBP/USD ended the week down by 0.43% to $1.2568.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

On Tuesday, May’s retail sales figures are due out ahead of June inflation figures on Wednesday.

While the stats are somewhat dated, the figures will provide some guidance on what lies ahead.

Outside of the numbers, COVID-19 and geopolitics will likely remain key drivers. Any material deterioration in the economic outlook and expect crude oil prices and the Loonie to suffer.

The Loonie ended the week down by 0.03% to C$1.3580 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead for the Aussie Dollar.

There are no material stats due out to provide the Aussie Dollar with direction.

A lack of material stats will give July’s prelim private sector PMIs some influence on Friday.

From elsewhere, expect private sector PMIs from the EU and the U.S and COVID-19 numbers to drive risk sentiment.

For the Aussie Dollar’s perspective, any further spread of the coronavirus would weigh in the week.

On the monetary policy front, the RBA’s monetary policy meeting minutes are due out on Tuesday. There are unlikely to be too many surprises, however. There may be some chatter over the recent border close down between New South Wales and Victoria, however…

The Aussie Dollar ended the week up by 0.66% to $0.6996.

For the Kiwi Dollar:

It’s a quiet week ahead on the economic calendar.

June trade figures are due out on Friday. With little else for the markets to consider earlier in the week, the Kiwi will be in the hands of COVID-19 and geopolitics…

The Kiwi Dollar ended the week down by 0.26% to $0.6557.

For the Japanese Yen:

It is a relatively busy week ahead on the economic calendar.

Economic data includes June trade data on Monday and inflation figures on Tuesday.

While we don’t expect too much impact on the Yen. The Yen will likely remain in the hands of COVID-19 and geopolitics in the week ahead and there’s plenty to consider…

The Japanese Yen ended the week down by 0.08% to ¥107.02 against the U.S Dollar.

Out of China

It’s a quiet week ahead on the economic data front.

Following last week’s data deluge, there are no material stats for the markets to consider.

That leaves chatter from Beijing and the state-owned media to drive risk sentiment in the week.

We had heard reports of the PBoC coming to an end of its easing cycle.

On the monetary policy front, the PBoC is in action on Monday. The markets are expecting the PBoC to leave loan prime rates unchanged following the recent forward guidance.

The Chinese Yuan ended the week up 0.10% to CNY6.9924 against the U.S Dollar.

Geo-Politics

UK Politics:

There’s still a long way to go before any agreement is in place. Johnson and the team are looking to get things wrapped up by the end of the month. That gives both sides just 2-weeks…

Will we see EU member states begin to break rank? Those reliant on the UK for tourism or imports may begin to get a little itchy. Such an outcome wouldn’t be a bad thing for the Pound.

U.S Politics:

Trump will be looking to change the narrative and draw attention away from the coronavirus pandemic.

China remains Trump’s target, so we can expect plenty of rhetoric in the week ahead. Don’t expect China to sit back, however…

For the Democrats, Biden will need to announce his running mate, which will have a material impact on the polls.

The EU Recovery Fund

Last week, EU member states were in action, discussing the mechanics of the EU Recovery Fund.

It was a stalemate as the Netherlands came up against Italy and Spain over the handling of the Recovery Fund.

Talks resumed on Saturday, and are due to extend into Sunday, with the deadlock unbroken at the time of writing.

Corporate Earnings

From the U.S, IBM (Mon), Coca-Cola (Tues), United Airlines (Tues), Microsoft (Wed), Tesla (Wed), Amazon.com (Thurs), Intel (Thurs), Twitter (Thurs), Chevron (Fri), and American Express (Fri) are amongst the big names.

Out of Germany, Daimler (Thurs) is the marquee name delivering earnings results.

The Coronavirus:

There was nothing positive from the first half of the weekend to ease concerns over the pandemic.

From the market’s perspective, the 3 key considerations have been:

  1. Progress is made with COVID-19 treatment drugs and vaccines.
  2. No spikes in new cases as a result of the easing of lockdown measures.
  3. Governments continue to progress towards fully opening economies and borders.

For now, the first scenario is the only one that could offset the worst-case scenarios that continue to be reported.

We are now seeing scenarios ii) and iii) unfold, which has led to a reported slowdown in the U.S economic recovery.

At the time of writing, the total number of coronavirus cases stood at 14,422,091. Monday to Saturday, the total number of new cases increased by 1,385,504. Over the same period in the previous week, the total number had risen by 1,306,584.

Monday through Saturday, the U.S reported 419,276 new cases to take the total to 3,833,271. This was up from the previous week’s 372,491.

For Germany, Italy, and Spain, there were 10,124 new cases Monday through Saturday. This took the total to 754,123. In the previous week, there had been 6,758 cases over the same period.

The Weekly Wrap – Economic Data and COVID-19 News Drives the Markets

The Stats

It was a particularly busy week on the economic calendar, in the week ending 17th July.

A total of just 74 stats were monitored, following the 30 stats from the week prior.

Of the 74 stats, 44 came in ahead forecasts, with 18 economic indicators coming up short of forecast. 12 stats were in line with forecasts in the week.

Looking at the numbers, 45 of the stats reflected an upward trend from previous figures. Of the remaining 29, 21 stats reflected a deterioration from previous.

For the Greenback, it was a 4th consecutive week in the red. In the week ending 17th July, the Dollar Spot Index fell by 0.73% to 95.942. In the week prior, the Dollar had fallen by 0.53%.

For the U.S, the daily COVID-19 numbers continued to spike to fresh highs in the week. Earlier in the week, news of progress towards a successful treatment drug delivered riskier assets with support, however.

Looking at the latest coronavirus numbers

At the time of writing, the total number of coronavirus cases stood at 14,189,223 for Friday, rising from last Friday’s 12,604,895 total cases. Week-on-week (Saturday thru Friday), the total number of cases was up by 1,584,328 on a global basis. This was higher than the previous week’s increase of 1,429,821 in new cases.

In the U.S, the total rose by 484,462 to 3,770,012. In the week prior, the total number of new cases had risen by 399,290.

Across Germany, Italy, and Spain combined, the total number of new cases increased by 10,432 to bring total infections to 743,647. In the previous week, the total number of new cases had risen by 7,406. Spain reported 2 consecutive days of more than 1,000 new cases.

Out of the U.S

It was a relatively quiet week on the economic data front.

Key stats included June industrial production and retail sales figures. July’s manufacturing sector and consumer sentiment figures were also in focus along with the weekly jobless claims.

Both industrial production and retail sales were on the rise once more in June supporting riskier assets.

The NY Empire State Manufacturing Index also got a much-needed boost in July.

By contrast, initial jobless claims rose by another 1.3m, with the Philly FED Manufacturing Index falling from 27.5 to 24.1.

At the end of the week, a deterioration in consumer sentiment in July was also negative.

In the equity markets, the NASDAQ fell by 1.08%, while the Dow and S&P500 gained 2.29% and 1.25% respectively.

Out of the UK

It was also a particularly busy week on the economic calendar.

Early in the week, manufacturing production and GDP figures for May delivered mixed results.

Manufacturing production rose by 8.4%, following a 24.4% slump in April, with the UK economy expanding by 1.8% in May. The UK’s 3-month rolling average GDP fell by 19.1%, however, following a 10.4% fall to April.

In the 2nd half of the week, claimant counts fell by 28.1k in June. This was a marginal decline, however, following a 566.4k jump in April. The unemployment rate held steady at 3.9% in May.

While the stats were mixed, it was a pullback at the start of the week that did the damage. Negative sentiment towards Brexit had weighed on the Pound going into the week.

In the week, the Pound fell by 0.43% to $1.2568 in the week, partially reversing a 1.11% gain in the previous week. The FTSE100 ended the week up by 3.20%, reversing a 1.10% loss from the previous week.

Out of the Eurozone

It was a relatively busy week economic data front.

Key stats included ZEW Economic Sentiment figures for Germany and the Eurozone.

Trade and industrial production figures from the Eurozone were also in focus.

The stats had a relatively muted impact on the EUR, however. Economic sentiment in Germany fell back in July while seeing a marginal pickup across the Eurozone.

Industrial production and trade figures also reflected an improving economic environment across the Eurozone.

The main event of the week, however, was the ECB’s monetary policy decision. In line with expectations, the ECB held policy unchanged, while assuring the markets of continued support.

Away from the numbers, news of progress towards a COVID-19 vaccine was also positive. A continued spike in new COVID-19 cases across the U.S did pressure the Greenback.

At the end of the week, the gathering of EU member states to discuss the EU Recovery Fund was also in focus. Hopes of progress had provided the EUR with support on Friday.

For the week, the EUR rallied by 1.13% to $1.1428, following a 0.46% gain from the previous week.

For the European major indexes, it was a bullish week. The DAX40 rose by 2.26% to lead the way. The CAC30 and EuroStoxx600 weren’t far behind with gains of 1.99% and 1.60% respectively.

For the Loonie

It was a relatively busy week on the economic calendar.

Economic data included manufacturing sales and wholesales sales figures for May.

While both reflected a partial recovery from April’s slump, it was the BoC monetary policy decision that was the main event.

On Wednesday, the BoC stated that there would be no rate hikes until the BoC achieved its inflation objective. The BoC also reiterated its willingness to deliver more support if the need arises.

As expected, the BoC did talk of uncertainty over the economic outlook.

In the BoC’s central scenario, the Bank forecasts real GDP to decline by 7.8% in 2020 before 5.1% growth in 2021.

The Loonie rose by 0.09% to end the week at C$1.3580 against the Greenback. In the week prior, the Loonie had fallen by 0.33% to C$1.3592.

Elsewhere

It was a mixed week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 17th July, the Aussie Dollar rose by 0.66% to $0.6996, while the Kiwi Dollar fell by 0.26% to $0.6557.

For the Aussie Dollar

It was a relatively busy week for the Aussie Dollar.

Early in the week, business and consumer confidence figures delivered mixed results. While business confidence pickup in June, consumer confidence rose at a softer pace in July.

For the RBA, both business and consumer confidence are key to support the economic recovery.

In the 2nd half of the week, employment figures were in focus. The stats were mixed, pinning the Aussie Dollar back.

While employment rose by 210.8k, full employment fell by 38.1k, with the unemployment rate rising from 7.1% to 7.4%.

It wasn’t enough to sink the Aussie, however, which had visited $0.70 levels in the week.

News of progress towards a COVID-19 vaccine contributed to the upside.

For the Kiwi Dollar

It was a relatively quiet week on the economic data front.

Key stats were limited to 2nd quarter inflation figures and June’s Business PMI.

In the 2nd quarter, inflationary pressures eased, with the annual rate of inflation falling from 2.5% to 1.5%. Consumer prices fell by 0.50% over the quarter, partially reversing a 0.80% rise from the 1st quarter.

A rebound in manufacturing sector activity was positive on Friday, however. The Business PMI jumped from 39.7 to 56.3, supporting a 0.34% gain for the Kiwi on the day.

Positive GDP numbers from China had failed to give the Kiwi a boost mid-week, however.

For the Japanese Yen

It was a particularly quiet week on the data front.

Finalized industrial production figures for May were in focus that failed to move the dial.

The Japanese Yen fell by 0.08% to end the week at ¥107.02 against the Greenback. In the week prior, the Yen had risen by 0.54%.

Out of China

It was a busy week on the economic data front.

The stats were skewed to the positive, though ultimately, the numbers were not to the market’s liking.

In the 2nd quarter, the economy grew by 11.5%, quarter-on-quarter, reversing a 9.8% contraction from the 1st quarter. Year-on-year, the economy grew by 3.2%, partially reversing a 6.8% contraction from the 1st quarter.

Fixed asset investment and retail sales disappointed, however, with declines of 3.1% and 1.8% respectively.

In the early part of the week, June trade figures had a relatively muted impact on risk sentiment.

In the week ending 17th July, the Chinese Yuan rose by 0.10% to CNY6.9924 against the Dollar. In the week prior, the Yuan had gained 0.95%.

The CSI300 slid by 4.39% in the week, with the Hang Seng falling 2.48%, with U.S – China tensions weighing.

NZD/USD Forex Technical Analysis – Main Trend Up, Minor Trend Down; Trader Reaction to .6552 Sets the Tone

The New Zealand Dollar is inching higher in a lackluster trade early Friday. The move is mirroring the price action in the U.S. equity markets so we have to conclude that investor demand for risk is the early focus for investors.

A stronger U.S. Dollar weighed on the Kiwi the previous session as worries that a resurgence in the coronavirus is starting to curb economic activity drew safe-haven flows into the greenback.

At 06:55 GMT, the NZD/USD is trading .6549, up 0.0012 or +0.19%.

Earlier in the session, a survey showed manufacturing activity in New Zealand moved back to expansionary territory in June after three months of contraction, helped by an easing of coronavirus-driven lockdowns and mobility restrictions.

The Bank of New Zealand-Business NZ’s seasonally adjusted Performance of Manufacturing Index (PMI) rose to 56.3 from 39.8 in May and 26 the month before. This is the best result since April 2018.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending slightly lower. A trade through .6601 will signal a resumption of the uptrend. The main trend will change to down when sellers take out the series of main bottoms at .6385, .6383 and .6381.

The minor trend is down. This is controlling the momentum. A trade through .6584 will change the minor trend to up. This will shift momentum back to the upside.

The minor range is .6601 to .6503. The Forex pair has been straddling its 50% level at .6552 the last two sessions.

The short-term range is .6585 to .6381. Its 50% level at .6491 is potential support.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the NZD/USD the rest of the session on Friday is likely to be determined by trader reaction to the pivot at .6552.

Bullish Scenario

A sustained move over .6552 will indicate the presence of buyers. This could lead to a quick test of the minor top at .6584. Overcoming this level could extend the rally into the main top at .6601.

The main top at .6601 is a potential trigger point for an acceleration to the upside with the next major targets a pair of main tops from 2019 at .6758 and .6791.

Bearish Scenario

A sustained move under .6552 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the minor bottom at .6503, followed closely by the 50% level at .6491.

The pivot at .6491 is a potential trigger point for an acceleration to the downside. The daily chart indicates there is plenty of room to the downside with the next target zone .6385 to .6381.

For a look at all of today’s economic events, check out our economic calendar.