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NZD/USD advances against a strong US dollar as traders brace for volatility -by Ecork

New Zealand Dollar, NZD/USD, Australian Inflation, Energy – Talking Points

  • Market sentiment falters as the FOMC and other high-impact events approach
  • Australian inflation data could see Aussie rise if it supports RBA rate hike
  • NZD/USD may fall after several failed attempts to clear the Fibonacci level

Wednesday’s Asia Pacific Forecast

Asia Pacific Markets are facing a mixed opening after US stocks fell during regular trading hours. With that said, a batch of rosy earnings reports from Alphabet Inc and Microsoft saw US stock futures rally early this morning. The Federal Reserve is scheduled to raise interest rates by 75 basis points at the Federal Open Market Committee meeting on Wednesday. The hawkish tone from the central bank Mr. Powell may lead to a further rally in the US dollar.

Australian Q2 inflation data is expected to break the wires at 6.2% today. That could be higher than 5.1%. The Australian dollar fell against the US dollar but rose against the New Zealand dollar overnight, indicating the underlying strength in the Australian dollar. The Australian dollar is likely to rise if today’s inflation data beats estimates, especially if market sentiment improves.

Cases of the Covid virus rose in China on Monday, according to CCTV. New cases of COVID-19 rose to 868 on Monday, up from 680 on Sunday, the Chinese news station said. Officials in Shenzhen have ordered new restrictions, and asked companies to limit workers to those in bubbles, being those who have little contact with the general public. These companies include Foxconn, a major iPhone maker. Chinese industrial earnings data for June is expected at 01:30 GMT.

Natural gas prices rose in Europe and the United States. Prices are up in the US as the continental US weather forecast sees seasonally high temperatures for the next 10 days. EU prices rose after Russian natural gas company Gazprom cut flows through its Nord Stream 1 pipeline even though EU countries agreed to cut demand by 15%.

Notable Events on July 27

Japan – Chance Index Final (May)

Japan – Leading Economic Indicator Final (May)

New Zealand Dollar / US Dollar Technical Outlook

The New Zealand dollar struggled to hold above the 38.2% Fibonacci retracement level, falling back below 0.6250. The past 3 trading sessions have seen the failure of daily attempts above the Fibonacci levels which are showing quite a bit of selling pressure around the price level. There may be a drop to the 20-day SMA and the 23.6% Fibonacci level after repeated failed attempts.

New Zealand dollar / US dollar daily chart

The graph was created using TradingView

— By Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or Tweet embed on Twitter

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