New Zealand just dropped new measures to combat the rapid rise in housing prices, which could put short-term pressure on the Kiwi. This could be an opportunity to ride the trend higher in AUD/NZD.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a range play opportunity forming on USD/CAD, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
| Equity Markets | Bond Yields | Commodities & Crypto |
|
DAX: 14657.21 +0.25% FTSE: 67726.10 +0.26% S&P 500: 3940.59 +0.70% NASDAQ: 13377.54 +1.23% |
US 10-YR: 1.689% -0.043 Bund 10-YR: -0308% +0.002 UK 10-YR: 0.816% +0.001 JPN 10-YR: 0.074% -0.036 |
Oil: 61.47 +0.08% Gold: 1,738.50 -0.18% Bitcoin: 55,720.50 -3.02% Ethereum: 1,737.01 -2.66% |
Fresh Market Headlines & Economic Data:
Stocks rise as tech rallies amid falling yields, Nasdaq closes more than 1% higher
New Zealand targets speculators in new assault on house prices
Covid cases rise across more than half of the U.S. as country races to vaccinate
China hits back at EU with sanctions on 10 people, four entities over Xinjiang
Powell calls cryptocurrencies ‘not really useful stores of value’ and says Fed will move slowly
U.S. existing home sales drop sharply; prices surge
U.S. economy is ‘on the brink’ of a complete recovery, says Richmond Fed’s Barkin
Euro area current account recorded €30B surplus in January 2021, down from €37B in Dec.
German tourist industry warns of job losses from tighter pandemic lockdowns
As vaccine battle with UK deepens, EU blames AstraZeneca
Boris Johnson says Europe third wave likely to hit UK as he calls Merkel and Macron
Upcoming Potential Catalysts on the Economic Calendar
Fed Bowman speech at 11:15 pm GMT
Bank of Japan Core CPI at 5:00 am GMT (Mar. 23)
U.K. Employment Report at 7:00 am GMT (Mar. 23)
ECB Enria speech at 8:00 am GMT (Mar. 23)
Bank of England Haldane speech at 8:40 am GMT (Mar. 23)
CBI Industrial Order Expectations at 11:00 am GMT (Mar. 23)
Bank of England Bailey speech at 11:50 am GMT (Mar. 23)
What to Watch: AUD/NZD
On the one hour chart above of AUD/NZD, we can see the pair has been in a steady uptrend throughout the month of March, and today we just saw a pop higher for potentially a new leg higher.
The small spike in volatility was likely a reaction to fresh news that the government of New Zealand will take new measure to tame the “rampant property market,” which has seen house prices rise an astounding 21.5% over the past year.
The Kiwi took a small hit across the board, and without much in the way of major catalysts ahead on the forex calendar, we may see NZD weakness persist throughout the Asia and London sessions.
With markets leaning risk-on broadly so far in this new week, that makes AUD/NZD the likely best candidate to play Kiwi weakness, but we wouldn’t jump on board just yet.
With stochastic already showing short-term overbought conditions, it’s likely the best entry strategy is to wait for a pullback to the rising ‘lows’ pattern / major psychological level marked on the chart above.
If we see AUD/NZD come back to retest the 1.0800 handle, and if enough bulls come in to hold that area, then it looks like a solid short-term buy opportunity given the overall price trend and a favorable risk-to-reward setup that usually comes with playing a higher ‘lows’ pattern and keeping a tight stop just below the trendline.
