Add business sentiment to the growing list of economic data that continues to outperform expectations in NZ.

Back in Q3 the index has dropped to its lowest level since 2009 at -40. And whilst Q4’s read is still technically pessimistic at -21, it has almost halved in just one quarter and posted its strongest quarter over quarter rebound in four years of +19 points. Still, the Service sector stands at -26 and is more pessimistic than the manufacturing sector, and firms remain cautious about hiring and investing. So, business sentiment is not completely out of the gloomy woods, it is heading the right direction to make an escape.

We highlighted four NZD crosses we were closely monitoring for a potential turning point, 3 of which have a positive carry. Out of the four, NZD/JPY is clearly taken the lead and potentially heading to retest December’s high. A weaker yen in anticipation of tomorrow’s US-Sino trade deal being signed is clearly helping to support. Of course, it will make an ideal candidate for bears to attack of it spectacularly falls through last minute, but this is an outside chance at present.

 

NZD/JPY: Overall, the daily trend structure remains firmly bullish. An elongated bullish hammer respected the 50 and 200-day eMA’s, and the 50 had already crossed above the200 whilst both point higher. More recently, price action has respected the 20-day eMA and yesterday’s candle closed at a 7-day high.

  • Near-term bias remains bullish above 72.30, although the daily trend remains bullish above 71.50.
  • Bulls could seek dips or continuation patterns on intraday timeframes, with a view for it to re-test December

 

Price Action Update:

EUR/NZD: The bias still remains bearish below 1.6868, although a pick-up of Euro Zone data means it’s yet to roll over. So until either NZ or EZ data underperforms expectations, we could find price action is to remain choppy.

NZD/USD: It’s just about hanging onto its bullish trendline, a break of which invalidates the bullish bias. Yet if it is to rebound from current levels, it will retain its bullish structure. One to watch for now.

NZD/CHF: It’s back below the 200-day eMA with the 50 and 20-day curling lower. So whilst it remais above key support around 0.6405, momentum is pointing the wrong way. We’d prefer to see bullish momentum return before becoming more confident it will break to new highs.

CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD hits two-month lows amid USD strength

EUR/USD has pared its gains that followed upbeat preliminary PMIs for Germany came out above expectations, pointing to a recovery. The USD is advancing amid fears of the coronavirus.

EUR/USD News

GBP/USD drops below 1.31 amid USD strength, fails to sustain PMI gains

GBP/USD is trading below  1.31 after hitting a fresh high of 1.3172. The UK Manufacturing PMI beat with 49.8 and Services PMI with 52.9. The USD is gaining ground across the board.

GBP/USD News

Cryptos: Bears take over and draw a bloody moon

Despite appearances, Bitcoin is the asset with the best risk/benefit ratio. The current falls are adjusted to the ranges of the previous rise. Downward momentum expires in the first half of February.

Read more

Gold rebounds above $1560 ahead of US PMI data

The XAU/USD pair dropped to a daily low of $1556.70 during the European trading hours as the easing worries over coronavirus becoming a global epidemic and a broad-based USD strength put the pair under bearish pressure.

Gold News

USD/JPY stuck in range around 109.50 amid China coronavirus concerns

USD/JPY sticks to its range play around the midpoint of the 109 handle amid rising fears of the Chinese coronavirus outbreak globally, upbeat Japanese CPI data and a minor bounce seen in the US dollar across the board. Focus shifts to US PMIs. 

USD/JPY News

Forex Majors

Cryptocurrencies

Signatures