NZDJPY has broken out of its short-term upward trend in the lead up to some important economic data out of New Zealand and China. The pair is currently testing the base of the aforementioned channel and it could turn lower if it’s rejected at this level. RSI has also taken a turn lower and is approaching bearish territory. However, if price manages to push back through its former support line, it would negate this possible bearish scenario.
NZ CPI
On the data front, we await the release of New Zealand’s Q2 inflation and China’s Q2 GDP figures. Both sets of numbers have the potential to shock NZDJPY. NZ’s CPI is due out at 2245GMT and is expected to show that inflation jumped a respectable 0.4% last quarter (1.8% y/y). A higher than expected figure could reinforce the RBNZ’s hawkish policy stance, while a very soft number could give the RBNZ room to breathe. The bank already doesn’t have the highest expectations for overall inflation, but significant upward pressure remains in non-tradables inflation, thus it would take a very weak number to cast any real doubt over the RBNZ’s planned tightening cycle. In any event, it’s likely that the RBNZ will hike the official cash rate by another 25 bps later this month.
China GDP
In China, the fragile nature of its economic recovery means that the market could respond poorly if today’s figures are significantly lower than expected - the market currently expects GDP to have risen around 7.4% y/y last quarter (0200GMT). In saying that, growth should rebound later in the year, thus a slightly weaker than expected number, say 7.3%, wouldn’t be overly concerning and shouldn’t have a lasting negative impact on the markets. On the other side of the equation, a stronger than expected number today would likely cause a relief rally due to lingering concerns about the health of China’s economy.
Source: FOREX.com
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.