Pound and Kiwi will be Key to Follow this Thursday
AUDNZD Range Support | Potential Bounce to 1.1300
AUDNZD is currently testing the bottom of its large range on the 4-hour time frame, with a bounce likely to take price back to the top around 1.1300. A weaker rally might last only until the middle of the range at the 1.1150 minor psychological level and area of interest.
Stochastic is on middle ground and barely offering any clear clues at the moment, although the path of least resistance is to the upside. In today’s early Asian trading session, New Zealand released weaker than expected quarterly PPI figures, with the input prices marking a 1.5% drop and the output prices seeing a 1.1% decline.
This could keep the pressure on the New Zealand dollar for the rest of the day, although the Australian dollar also got a blow from weak inflation expectations data and a fall in iron ore prices. Both commodity currencies are seeing weakness for the time being, which suggests that the range might stay intact.
A breakdown, however, could confirm that more losses are in the cards for AUDNZD. This could take prices lower by as much as 250 pips, which is the same height as the chart pattern. There are no major catalysts on tap from Australia or New Zealand though.
GBPNZD Retracement Setup | Resistance at 2.0000
After its recent steep drop, GBPNZD seems to be making a huge market correction as it pulled up from the 1.9700 mark to 2.0000. This area lines up with the 38.2% Fib and the broken support zone, which might allow it to hold as resistance this time.
Stochastic is already indicating overbought conditions, although it hasn’t crossed lower yet, which means that buying pressure is weakening. If sellers take over, GBPNZD could find its way back to its previous lows around the 1.9700 mark or create new ones.
Event risks for this trade include the release of UK retail sales later, which is expected to show a 0.4% rebound in consumer spending. Recall that the previously released BOE meeting minutes indicated that the central bank was slightly less dovish than expected, which might keep the pound afloat.
Meanwhile, data from New Zealand has been somewhat disappointing, as the quarterly PPI figures missed expectations. The PPI input marked a 1.5% drop while the PPI output showed a 1.1% decline, both of which hint at weaker consumer inflation down the line.
CADJPY Ascending Triangle | Potential Upside Breakout
CADJPY seems to be waiting for more economic data before picking a clearer direction, although the BOJ’s monetary policy stance suggests an upside bias. For today, Canada will release its wholesale sales report and possibly spark more volatility and direction for this pair.
Earlier today, news of further BOJ easing pushed the yen much lower against its forex counterparts, as the latest announcement confirmed that dovish policymakers drew more support. This could push CADJPY past the 105.00 handle in the next few hours and possibly higher during the US trading session.
However, a weak Canadian report might force the pair to give up some of its recent gains and allow for a sharp correction. In that case, buyers might take it as a cue to hop in the uptrend at better prices and allow the pair to resume its rally nonetheless.
Recall that the Japanese economy has fallen back in recession for the third quarter, as growth fell by 0.4% owing to weak consumer spending and the sales tax hike. Officials have mulled pushing the next tax hike to a much later date in order to give the economy more room to recover.