Daily Technical Outlook

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NZDJPY Inverse Head and Shoulders (Aug 17, 2017)

NZDJPY appears to be done with its tumble as price is forming an inverse head and shoulders pattern on its 1-hour time frame. Price also seems to have broken past the neckline at 80.00 to confirm that gains are in the cards.

The chart pattern is approximately 100 pips tall so the resulting rally could be of the same size. However, the 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse.

Price is still testing the 200 SMA dynamic resistance but a break higher could be enough to confirm that buyers are regaining the upper hand. Stochastic is also pointing up to signal that bullish momentum is returning.

New Zealand reported stronger than expected quarterly PPI, which sets the tone for stronger inflationary pressures down the line. Over the weekend, the Q2 retail sales figures also indicated a strong pickup in consumer spending, which would likely support overall growth.

As for the yen, the pickup in risk appetite after concerns about North Korea eased is forcing the lower-yielding currency to retreat. However, Japan just reported stronger than expected trade balance, supporting the idea of JGB trimming by the BOJ.

There are no other reports due from either Japan or New Zealand for the rest of the week so this pair could move to the tune of overall market sentiment, which might be driven by headlines in the next few days.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPJPY Triangle Breakdown (Aug 18, 2017)

GBPJPY was previously trading inside an ascending triangle visible on its daily time frame and has just broken below support to signal that bears have gotten the upper hand. The chart pattern is around 2300 pips tall so the resulting selloff could be of the same size.

The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. However, the gap is pretty narrow so a downward crossover could be possible, drawing more sellers in the mix. Stochastic is already indicating oversold conditions, though, so profit-taking could take place.

Economic data from the UK has been mostly stronger than expected this week, with the claimant count change, average earnings index, and retail sales all coming in higher than consensus. However, CPI was still notably weak and this carries the most weight in dictating BOE policy biases.

As for the yen, the lower-yielding currency is able to gain on risk-off moves in the past few days, as well as dollar weakness on the rumored resignations among top officials in Washington. There are prevailing speculations that the Trump administration will have a hard time pushing its fiscal policy reform forward now that several GOP members are distancing themselves from the President.

Japan is still set to print its CPI readings at the end of the week and strong figures could prompt more expectations of further BOJ tapering. The central bank has already trimmed its JGB purchases in its recent operations, adding another bullish factor for the Japanese currency.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPNZD Range Setup (Aug 22, 2017)

GBPNZD has recently bounced off the top of its range at the 1.7900 major psychological level and is making its way to the bottom at 1.7400. If this holds as support, another bounce back to the resistance could take place.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, which means that the support is more likely to hold than to break. These moving averages could also hold as near-term inflection points.

Stochastic is pulling up to show a return in buying pressure as well, which signals that bulls could push price back up for another test of resistance.

UK Rightmove HPI printed a 0.9% drop in price levels versus the earlier 0.1% uptick. Only the CBI industrial orders expectations report is due today and a dip from 10 to 8 is eyed.

In New Zealand, credit card spending ticked up by 7.2%, slower than the earlier 8.3% gain. There are no reports due from New Zealand for the rest of the day, leaving the Kiwi at the mercy of market sentiment.

More volatility for this pair could be seen later in the week with the release of the UK preliminary GDP and the Jackson Hole Symposium. New Zealand also has its trade balance lined up on Thursday's early Asian session.

By Kate Curtis from Trader's Way

 

[katetrades]

EURUSD Short-Term Range (Aug 23, 2017)

EURUSD has been moving inside a range visible on its 1-hour time frame, finding support at the 1.1700 mark and resistance at 1.1800. Price is currently hovering around the mid-channel area of interest and could be due for a move back to support.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. However, these moving averages are also holding as dynamic support for the time being and may be enough to push price back to the top of the range. Stochastic is on its way up to indicate that buyers are in control of price action for now.

The spotlight is on ECB Governor Draghi's upcoming speech in the Jackson Hole Symposium as many are counting on him to share more details on tapering asset purchases. However, the latest ECB statement revealed that policymakers aren't keen on giving more clues on their next moves just yet.

Meanwhile, the dollar has gained some support from safe-haven flows as the tensions with North Korea are resurfacing. The joint military exercises between the US and South Korea aren't being viewed favorably by Pyongyang so there are concerns that this could prompt missile action from Kim Jong Un.

Euro zone data turned out weaker than expected so far this week as the German ZEW economic sentiment index fell from 17.5 to 10 versus the 14.8 consensus while the region's index dropped from 35.6 to 29.3. Flash manufacturing and services PMIs are due and strong reports could allow the shared currency to rebound.

By Kate Curtis from Trader's Way

 

[katetrades]

AUDNZD Potential Correction (Aug 24, 2017)

AUDNZD has been trending higher but is recently testing a ceiling at the top of its ascending channel visible on the 4-hour time frame. Price could be due for a correction to the channel support and applying the Fib tool shows the potential inflection points.

The 61.8% Fib is closest to the channel support at the 1.0850 minor psychological level and the 100 SMA, which could hold as dynamic support. This short-term moving average is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.

However, stochastic is turning lower to show that profit-taking is likely to happen soon. In that case, the resistance is likely to hold and might provide an opportunity for a countertrend play.

The Kiwi was weighed down by the release of the New Zealand Treasury's pre-election update, which contained downgrades on growth forecasts and a less upbeat view on employment and wages. New Zealand's trade balance is up for release next and a narrower deficit of 200 million NZD is eyed compared to the earlier 242 million NZD shortfall, likely indicating a pickup in export activity.

Meanwhile, the Aussie has been able to stay afloat on the lack of negative updates from the Land Down Under. The comdoll has also drawn support from a rebound in iron ore prices after the commodity rebounded off technical support levels. There are no major reports lined up from both Australia and New Zealand until the end of the week, though, so profit-taking or consolidation could ensue.

By Kate Curtis from Trader's Way

 

[katetrades]

EURCAD Bearish Channel (Aug 25, 2017)

EURCAD is trending lower and is moving inside a short-term descending channel visible on the 1-hour chart. Price just bounced off the resistance and is making its way back to support at the 1.4700 handle.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the downtrend is more likely to continue than to reverse. In addition, the 100 SMA appears to be holding as dynamic resistance while the 200 SMA is close to the channel resistance, adding an extra layer of resistance.

Stochastic is on the move up, though, so there may be some bullish pressure left in play. In that case, another test of the channel resistance could take place before more bears push for the trend to resume.

There have been no major reports from the euro zone in the previous trading sessions, leaving traders to price in their expectations for ECB head Draghi's speech in Jackson Hole. According to a source from the ECB, policymakers aren't ready to share more details on their next policy moves just yet, which suggests that there could be room for disappointment during the event.

As for the Canadian dollar, the currency has been able to hold on to its gains despite the dip in crude oil. Hurricane Harvey is projected hit Texas on Friday so refineries are ramping up output to prepare for likely shutdowns when the storm hits. This could keep supply elevated throughout next week, possibly leading crude oil to retreat.

By Kate Curtis from Trader's Way

 

[katetrades]

NZDJPY Support Turned Resistance (Aug 28, 2017)

NZDJPY recently broke below support at the 79.50 minor psychological level then dipped to the 78.50 mark. Price pulled up from there and applying the Fibonacci retracement tool on the latest swing high and low on the 1-hour time frame shows that the 61.8% level lines up with the broken support.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In fact, the 100 SMA already seems to be holding as dynamic resistance at the moment since it lines up with the 50% Fib. A larger pullback could last until the 200 SMA just past 79.50.

Stochastic is on the move down so the pair might follow suit, but the oscillator also seems to be turning higher to suggest that Kiwi bulls aren't giving in so easily.

Economic data from Japan turned out mixed last week, with the national core CPI advancing from 0.4% to 0.5% and the Tokyo core CPI beating expectations by posting a 0.4% gain. The services producer price index, however, came in short of expectations with a 0.6% gain versus the 0.8% consensus.

Japan is set to print its household spending report and unemployment rate on Tuesday. Retail sales and preliminary industrial production data are also lined up for the week. There are no major reports from New Zealand so market sentiment could be responsible for directing Kiwi price action.

By Kate Curtis from Trader's Way

 

[katetrades]

EURCAD Inverse Head and Shoulders (Aug 29, 2017)

EURCAD seems ready to go for a move higher as it formed an inverse head and shoulders pattern on its daily time frame. Price has yet to break past the neckline at the 1.5000 major psychological level before confirming the potential long-term climb. The chart pattern is approximately 500 pips tall so the resulting rally could be of the same size.

The 100 SMA is safely above the longer-term 200 SMA so the path of least resistance is to the upside. The 100 SMA also recently held as dynamic support and might continue to do so in the event of another pullback. Stochastic hasn't quite reached oversold levels on the daily time frame yet but the oscillator is already pulling up to signal a return in bullish momentum.

Crude oil has tumbled nearly 3% at the start of the week as investors are worrying about a potential buildup in supply while refineries in Texas are shut down due to Hurricane Harvey. The tropical storm is expected to move to Louisiana later in the week and might lead to temporary closures in processing facilities there as well.

Medium-tier data from the euro zone has been weaker than expected so far this week but traders appear optimistic that the ECB is moving closer to tapering its asset purchase program sooner or later. The German GfK consumer climate index is due later today and no change from the 10.8 reading is eyed.

Also due today are the French consumer spending and preliminary GDP numbers, and upbeat results could give the euro another boost. As for the Canadian dollar, the RMPI and IPPI could prove to be short-term catalysts if they come in significantly stronger or weaker than expected.

By Kate Curtis from Trader's Way

 

[katetrades]

EURCAD Double Top (Sep 05, 2017)

EURCAD could be in for a selloff as the pair formed a double top classic reversal pattern and broke below the neckline at the 1.4750 minor psychological level. Price is pulling up to this broken support level, which might now hold as resistance.

The 100 SMA is still above the longer-term 200 SMA, though, so the path of least resistance might still to the upside. However, the gap between the moving averages is narrowing to signal a potential downward crossover and pickup in selling pressure. Stochastic is on the move up to signal that buyers still have the upper hand until the oscillator reaches the overbought level and turns lower.

Data from the euro zone has been mixed so far this week, with the Spanish unemployment change falling short of estimates and the Sentix investor confidence index turning out higher than consensus. Canadian banks were closed for the holiday on Monday so the Loonie has taken its cue from crude oil prices and market sentiment.

Both the ECB and the BOC have monetary policy statements lined up this week so there could be room for a lot of volatility for this pair. These central banks are among the more hawkish ones so expectations are running high for comments on tapering for the ECB and another potential hike from the BOC.

Disappointment from either central bank could mean big moves for this pair. There have been talks of potential ECB jawboning as the shared currency has been advancing against its peers in the past weeks while the Loonie could stay sensitive to overall risk sentiment and crude oil action.

By Kate Curtis from Trader's Way

 

[katetrades]

AUDNZD Short-Term Triangle (Sep 11, 2017)

AUDNZD has been moving sideways recently with higher lows and lower highs creating a symmetrical triangle pattern on its 1-hour time frame. Price has just bounced off support and could be due for a test of resistance again.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This suggests that an upside break is more likely to occur than a break lower, although it's also worth noting that the gap between the moving averages is narrowing to show a slowdown in bullish momentum.

Stochastic is turning higher to indicate that bulls could stay in control until the oscillator reaches overbought levels. The chart pattern is approximately a hundred pips tall so the resulting breakout could be of the same size.

The main event risks for the Aussie this week is Australia's jobs report, which might show a 19.2K gain in hiring versus the earlier 27.9K increase. Stronger than expected results could lead to an improvement in the 5.6% jobless rate and more gains for the Aussie.

Meanwhile, the Kiwi has medium-tier reports like the FPI and Business NZ manufacturing index on the docket. China is also set to print its industrial production, retail sales, and fixed asset investment figures due this week and these could be catalysts for additional volatility as well.

By Kate Curtis from Trader's Way

 

[katetrades]

EURUSD Double Top (Sep 12, 2017)

EURUSD appears to be tired from its climb as the pair is forming a double top reversal pattern on its 4-hour time frame. Price failed in its last two attempts to break past the 1.2070 area and is on its way to testing the neckline at the 1.1850 minor psychological support.

A break below the neckline support could confirm the potential selloff, which might last by around 200 pips or the same height as the chart formation. However, the 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside. In addition, the moving averages are close to the neckline, adding strength to support.

Stochastic is pointing down to indicate that sellers are in control of EURUSD price action, but the oscillator is closing in on the oversold level to signal that profit-taking might happen soon.

The dollar has been able to recover against most of its peers at the start of the week, thanks to strong stock market performance and easing geopolitical concerns. The US government has dialed down on its proposed sanctions on North Korea, lowering the chances of another retaliation from the hermit nation. Apart from that, news that Hurricane Irma is weakening has also been positive for the US markets.

Data from the euro zone has been stronger than expected as Italian industrial production ticked 0.1% higher instead of posting the projected 0.5% decline. French final non-farm payrolls for Q2 and the Italian quarterly unemployment rate are lined up next. Only the NFIB Small Business Index and JOLTS job openings are due from the US today.

Keep in mind, however, that the ECB is currently undergoing tapering expectations for either October or December even after Governor Draghi tried to downplay the idea in their statement last week. Meanwhile, Fed rate hike expectations for this month are running low but the idea of starting the balance sheet runoff could still keep the dollar supported.

By Kate Curtis from Trader's Way

 

[katetrades]

AUDNZD Resistance Turned Support (Sep 13, 2017)

AUDNZD has sold off in the past couple of days but the uptrend remains intact. Price is moving inside an ascending channel formation on its 4-hour time frame and is currently testing support at the 1.1000 major psychological level.

This coincides with a former resistance level that might hold as a floor from here. It also lines up with the 100 SMA, which is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. Stochastic is indicating oversold conditions, which means that sellers are exhausted and ready to let buyers take over.

There have been no major reports out of New Zealand, leaving traders to react to polls leading up to next week's elections. The Kiwi enjoyed a boost from a poll indicating that the Green Party might not have enough votes to be represented in Parliament. This could ease some political uncertainty as it would leave the National Party to secure majority of the seats and avert a coalition government.

Meanwhile, Australia has its jobs report due later on this week and might report a 17.5K gain in hiring. This would be lower than the earlier 27.9K increase but still enough to keep the unemployment rate steady at 5.6%. Stronger than expected data could support hopes that the RBA could switch to a more hawkish bias in their next policy announcements.

China is also set to print a number of top-tier reports on Thursday, namely industrial production, retail sales, and fixed asset investment. A rebound in the first two figures is eyed but fixed asset investment could lag from 8.3% to 8.2%.

By Kate Curtis from Trader's Way

 

[katetrades]

EURJPY Countertrend Play (Sep 14, 2017)

EURJPY is still moving in an uptrend but is currently bouncing off the top of its ascending channel resistance on the 4-hour time frame. Stochastic is also turning lower from the overbought zone to indicate a pickup in selling pressure.

If this keeps up, price could drop to the channel support at the 130.50 minor psychological level. This lines up with the moving averages dynamic inflection points. However, the 100 SMA is above the longer-term 200 SMA to signal that the path of least resistance is still to the upside.

Euro bulls could wait for an actual test of the channel support before going long and aiming for the channel resistance at the 132.50 minor psychological level or higher.

Data from the euro zone has been mostly stronger than expected so far this week. The German final CPI reading was unchanged at 0.1% as expected but the WPI was stronger than expected at 0.3% versus the projected 0.1% gain. The region's employment change figure for Q2 was also better than expected at 0.4% versus 0.3% while the previous period's reading enjoyed an upgrade.

As for the yen, data has also been upbeat as the BSI manufacturing index recovered from -2.9 to +9.4, much higher than the projected +4.8 reading. Annual PPI came in a notch lower than the projected 3.0% figure at 2.9% but still marked a decent improvement over the earlier 2.6% figure.

There are no major reports due from both the euro zone and Japan today, so price action could hinge mostly on market sentiment. Also note that the yen has sold off on dollar strength as expectations for an upbeat CPI release kicked in when the PPI beat consensus.

By Kate Curtis from Trader's Way

 

[katetrades]

NZDJPY Breakout and Pullback (Sep 15, 2017)

NZDJPY was previously consolidating inside a falling wedge formation before an upside breakout occurred. Price reached a high of 80.40 before pulling back, possibly making a retest of the broken wedge resistance. Stochastic is heading lower for now, so sellers have the upper hand until the oscillator hits oversold levels and turns higher.

Applying the Fib tool on the latest swing low and high on the 4-hour time frame shows that the 61.8% level is closest to the broken resistance and also lines up with an area of interest or former resistance. This is also close to the 100 SMA dynamic support, which is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.

Risk appetite has picked up for the most part of the week as geopolitical risks related to North Korea's missile threats have been subdued. At the same time, dollar strength has translated to yen weakness, buoying most yen pairs higher in the past few days, although signs of profit-taking are materializing.

There have been no major reports out of New Zealand this week, with the election polls being the main source of volatility. Earlier on, a poll indicating that the Green Party would likely not get enough votes to secure seats in Parliament spurred speculations that the National Party won't have trouble holding on to majority.

There are no major reports from both Japan and New Zealand until the end of the week, but risk sentiment could be in for a big shift once more if North Korea launches another test or makes more threats over the weekend. Also, the US retail sales release could influence yen-dollar dynamics once more.

By Kate Curtis from Trader's Way

 

[katetrades]

EURGBP Resistance Turned Support (Sep 18, 2017)

EURGBP sold off sharply from its previous rally to the .9300 region, pulling back to an area of interest around the .8700 to .8800 levels. This lines up with the 50% to 61.8% Fibs, which could hold as potential support. Stochastic is already indicating oversold conditions to show that sellers need to take a break, but the oscillator has to pull higher to signal that buyers are getting back in.

The 100 SMA is still above the longer-term 200 SMA on the daily time frame so the path of least resistance is still to the upside. Price is also trading around the 100 SMA dynamic support but a larger pullback to the 200 SMA dynamic inflection point closer to the lowest Fib is possible.

The pound got a strong boost from better than expected UK CPI, which then fueled hawkish expectations for the BOE decision. The central bank acknowledged that the economy has been improving and signaled a potential tightening move down the line, with MPC member Vlieghe reiterating those upbeat points on Friday.

Meanwhile, the euro was also previously supported by ECB tapering expectations but has been vulnerable to a selloff with some officials expressing concern about currency appreciation. Also, the region's trade balance turned out weaker than expected on Friday at a surplus of 18.6 billion EUR versus the earlier 21.7 billion EUR and the estimated 20.1 billion EUR figure.

Euro zone final CPI readings are due today, along with the Italian trade balance. As for the UK, the freshly released Rightmove HPI showed a 1.2% decline in house prices, following the earlier 0.9% drop. UK retail sales is due later in the week and analysts are expecting to see a 0.2% uptick.

By Kate Curtis from Trader's Way

 

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Trade Setup for the Day: Short NZD/USD

The New Zealand dollar was able to bounce back against the Greenback during yesterday’s trading, thanks to the G7 statement saying that central bank should make their monetary policy decisions based on economic performance and not currency devaluation.

There were no economic factors that supported this bounce so NZD/USD might resume its selloff pretty soon, especially since it’s heading close to the .8450 minor psychological level. The 4-hour time frame reveals that this level has held strongly in the past and could continue to do so if it gets tested this week.

Take note that the US will be printing its January retail sales figure during today’s New York session and both core and headline figures are expected to show a 0.1% increase. A weaker than expected reading could trigger a dollar selloff and push NZD/USD back to .8450.

If the resistance at .8450 holds, a possible target could be around the recent lows near .8300 and the rising trend line. A stop 25 pips above the .8500 major psychological resistance would yield a 2-to-1 reward-to-risk ratio in this case.

New Zealand will be printing its quarterly retail sales figure for Q4 2012 on Friday’s early Asian session and, judging from the same period’s weaker than expected jobs figures, we might see a negative reading or a downside surprise. If that happens, the rising trend line could be broken and NZD/USD could fall until the next support around .8150.

By Kate Curtis from Trader's Way

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[katetrades]

USDCAD Downtrend Pullback (Sep 19, 2017)

USDCAD continues to trend lower but seems to be in a correction from its current selloff. Applying the Fibonacci retracement tool shows that the the 50% level lines up with the trend line resistance and the 1.2400 major psychological level that might keep gains in check.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the downtrend is more likely to continue than to reverse. The 100 SMA is already holding as dynamic resistance at the moment but both RSI and stochastic are still on the move up to signal that the correction is still in play.

The line in the sand is at the 61.8% Fib or the 1.2500 handle, which lines up with a previous support zone. A convincing break past this area could signal that buyers are getting stronger and are ready to sustain an uptrend.

The main event risk for this setup is the FOMC statement as the central bank will also release its updated growth forecasts, which might contain revisions on account of the recent hurricanes. In this meeting, a press conference is also scheduled so traders are likely to pay close attention to Yellen's responses to get clues on whether December tightening is still possible or not.

Canada's top-tier events aren't scheduled to take place until Friday, during which the CPI and retail sales figures will be printed. Stronger than expected results could continue to fuel expectations for another BOC interest rate hike before the end of the year.

Both the BOC and the FOMC have hiked interest rates twice this year but the former has been more of a surprise compared to the latter. In fact, rate hike expectations for the Fed have considerably fallen in the past few months on downbeat inflation and slowing employment.

By Kate Curtis from Trader's Way

 

[katetrades]

EURCAD Triangle Resistance (Sep 20, 2017)

EURCAD is forming a descending triangle on its 4-hour chart and could be due for a test of the top. This lines up with the 61.8% Fibonacci retracement level near the 1.4850 minor psychological mark and a former support zone.

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that the resistance is more likely to hold than to break. Price is currently testing the 100 SMA dynamic resistance but may still have some momentum left to test the 200 SMA dynamic inflection point.

Stochastic is already indicating overbought conditions and is starting to turn lower to show a return in selling pressure. If any of the Fibs are able to keep gains in check, price could fall back to support around the 1.4500 handle.

The main event risks for this trade are the Canadian retail sales and CPI releases on Friday. Analysts are expecting to see a 0.2% increase in headline retail sales, faster than the earlier 0.1% uptick, and a 0.4% gain in the core version of the report. Headline CPI is projected to come in at 0.2% after staying flat in the previous month.

As for the euro, volatility could also kick higher towards the end of the week with a couple of speeches by Draghi and the PMI readings from its top economies. ECB officials have been trying to talk down the shared currency, wary of spurring more gains on speculations of ECB tapering.

If Draghi emphasizes the challenges posed by a stronger euro, the shared currency could give up more of its recent gains. On the other hand, focusing on the improvements in the region and giving more clues on what their next policy moves might be could keep it supported.

By Kate Curtis from Trader's Way

 

[katetrades]

GBPNZD Ascending Trend Line (Sep 21, 2017)

GBPNZD has been trending higher and is moving above an ascending trend line connecting the latest lows of price action since August 22. Price has surged past the area of interest around 1.8200 and has found resistance at 1.8700 before pulling back.

Applying the Fib tool on its latest swing low and high shows that the 61.8% level lines up with the area of interest and trend line. It also coincides with the 100 SMA, which is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.

The gap between the moving averages is getting wider to indicate that bullish momentum is getting stronger. At the same time, stochastic is indicating oversold conditions and might turn higher to also reflect a return in buying pressure. If that happens, a test of the swing high could be underway.

Economic reports from the UK have been mostly stronger than expected, with CPI, claimant count, and retail sales all surpassing estimates. This supports the BOE's hawkish stance, even as Carney recently admitted that the rise in global rates was partly the reason for their tightening bias.

As for the Kiwi, data has also been mostly upbeat this week. The GDT auction yielded a stronger 0.9% gain in prices compared to the previous 0.3% uptick while the current account balance reflected a smaller deficit. The Q2 GDP is due next and a 0.8% growth figure is eyed, stronger than the earlier 0.5% expansion.

However, the upcoming RBNZ decision could be preventing the Kiwi from advancing any further as jawboning remarks are expected. The parliamentary elections also poses uncertainty even as surveys hinted a National Party victory.

By Kate Curtis from Trader's Way

 

[katetrades]

AUDJPY Uptrend Setup (Sep 22, 2017)

AUDJPY continues to trend higher and is moving inside an ascending channel pattern on its 4-hour chart. Price just bounced off the resistance at 90.30 and is making a pullback to support at the 89.00 area.

Applying the Fibonacci retracement tool on the latest swing low and high shows that the 61.8% level lines up with the channel support, adding to its strength as a floor. However, price already seems to be bouncing off the 50% Fib and could be poised for another test of resistance from here.

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This means that the uptrend is more likely to continue than to reverse. Stochastic is still pointing down to indicate that there may be a bit of selling pressure left before Aussie bulls get back in the game.

The BOJ kept interest rates on hold as expected and didn't trigger too much of a reaction from the Japanese currency. The central bank also maintained its pace of JGB purchases while keeping a relatively upbeat outlook on the economy.

However, the Aussie was on the decline due to weaker commodity prices, particularly metals like iron ore. The latest FOMC statement, which turned out more hawkish than expected, was being blamed for the selloff as a tightening bias would weigh on global demand down the line.

There are no other reports lined up from Japan or Australia for the rest of the week as traders look to market sentiment for clues. There are still some concerns about an attack from North Korea, which would drastically weigh on the higher-yielding Aussie and might lead to a gap over the weekend if the tension escalates.

By Kate Curtis from Trader's Way