Once again, no major catalysts expected for this Friday’s Asia and London session, which makes this textbook technical setup on NZD/JPY one to watch for potential short-term pips.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a setup on GBP/USD as it retraces after a strong rally, 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: 15199.68 +0.33% FTSE: 6963.33 -0.59% S&P 500: 4112.50 +1.22% NASDAQ: 13124.99 +0.72% |
US 10-YR: 1.656% -0.047 Bund 10-YR: -0.124% -0.012 UK 10-YR: 0.898% -0.001 JPN 10-YR: 0.095% +0.016 |
Oil: 63.75 -3.53% Gold: 1,827.2 +0.24% Bitcoin: $49,228.75 -9.71% Ethereum: $3,700.95 -9.57% |
Fresh Market Headlines & Economic Data:
Dow rebounds more than 400 points after blue chips suffer worst loss since January
U.S. weekly jobless claims at 14-month low; inflation heating up
U.S. yields retreat after four-day advance
Another inflation gauge comes in hot with producer prices jumping 6.2% in April from a year ago
CDC says fully vaccinated people don’t need to wear face masks indoors or outdoors in most settings
U.S. retail gasoline shortages worsen as pipeline attempts restart
Bank of Canada says complete recovery needed to withdraw support
Mexico’s central bank leaves rates unchanged as inflation expectations rise
Upcoming Potential Catalysts on the Economic Calendar
New Zealand Manufacturing Index at 10:30 pm GMT
Japan M2 Money Supply at 11:50 pm GMT
Australia Consumer Inflation Expectations at 1:00 am GMT (May 14)
ECB Monetary Policy Meeting Accounts at 11:30 am GMT (May 14)
What to Watch: NZD/JPY
On the one hour chart above of NZD/JPY, we can see the bulls reacted positively to the rising ‘lows’/channel pattern, originally spotted a couple of days ago by my man Big Pippin who also saw potential support at the rising moving averages around 77.90 – 78.50. With the bulls seemingly back in control of the pair, is it time for another short-term leg higher?
Well, broad risk sentiment has been down in the dumps thanks to rising inflation fears this week, but now that we’ve confirmation that inflation is pretty high, there’s a chance that inflation as a broad driver could fade/give way to other themes.
We also saw a broad market bounce in U.S. equities before the U.S. session close without a major catalyst for the bullish shift, which suggests that the recent broad market selloff may have run out of steam, at least for now.
If that’s the case, safe haven demand like for the Japanese yen may be done at the moment, which could lift the pair higher over the next session. And we may also get a boost from the upcoming New Zealand manufacturing index update, which has been trending positively, breaking the 60’s in their April read for an all-time high read of 63.6.
If we see another positive read like that, then NZD/JPY may have the legs to go for a retest of the May high around 79.40 before the end of the week.
Of course, if broad risk sentiment continues to sour and/or the latest New Zealand manufacturing data disappoints, the odds of a bullish reversal significantly drops, turning our watchlist on NZD/JPY into a bearish one, and keeping an eye out for a downside break of today’s lows before considering a bearish setup.
