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The NZD/USD pair fell during the course of the week, dropping down to the 0.8450 region, and then closing at the 0.85 handle. Because of that, it appears that the market is ready to bounce, and on a break of the top of the hammer we believe that this market returns to the 0.88 level. With that, we feel that this market can be bought, but that being the case we feel that a move below the 0.84 level would in fact be very bearish. Either one of those two moves gets us involved in this market.
The New Zealand dollar rebounded from a two-month low against its U.S. counterpart on Friday, as weaker than expected U.S. employment data forced investors to recalibrate their assumptions about the future course of the Federal Reserve's monetary policy.
NZD/USD hit 0.8462 on Friday, the pair’s lowest since June 5, before subsequently consolidating at 0.8514 by close of trade on Friday, up 0.16% for the day but 0.47% lower for the week.
The pair is likely to find support at 0.8462, the low from August 1 and resistance at 0.8556, the high from July 29.
The Labor Department reported that that U.S. economy added 209,000 jobs in July, below forecasts for jobs growth of 233,000. The previous month’s figure was revised up to a gain of 298,000 from a previously reported increase of 288,000.
Although it was the sixth successive month that the U.S. economy added more than 200,000 jobs, the unemployment rate unexpectedly ticked up to 6.2% from 6.1% in June. In addition, wage growth was flat, pointing to underlying slack in the economy.
The data prompted investors to trim back expectations on the timing of a possible rate hike by the Federal Reserve, sending the dollar lower.
The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. economy expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.
The kiwi also found support after official data released Friday showed that China's manufacturing purchasing managers’ index rose to a two-year high of 51.7 in July from 51.0 in June, beating market expectations for a 51.4 reading.
Still, China's HSBC final manufacturing PMI for July ticked down to 51.7 from a preliminary reading of 52.0. Analysts had expected the index to remain unchanged.
The Asian nation is New Zealand’s second-largest trade partner.
The New Zealand dollar had been under broad selling pressure since the Reserve Bank of New Zealand last week raised its benchmark interest rate to 3.50% from 3.25%, but signaled that rates will not go any higher this year.
Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the New Zealand dollar in the week ending July 22.
Net longs totaled 15,289 contracts, up slightly from net longs of 15,132 in the preceding week.
In the week ahead, investors will be looking ahead to key U.S. data on service sector activity in July, while second quarter employment data out of New Zealand will also be in focus.
Tuesday, August 5
- The U.S. is to publish data on factory orders, while
the Institute of Supply Management is to release data on service sector
growth.
Wednesday, August 6- New Zealand is to release data on the change in the number of people unemployed and the unemployment rate.
- Later in the day, the U.S. is to publish data on the trade balance.
Thursday, August 7- The U.S. is to publish the weekly report on initial jobless claims.
Friday, August 8The Australian dollar bounced off an eight-week low against its U.S. counterpart on Friday, as traders pared back their expectations for how soon the Federal Reserve will begin raising interest rates following the release of disappointing U.S. employment data.
AUD/USD hit a daily low of 0.9276 on Friday, the pair’s weakest level since June 5, before subsequently consolidating at 0.9314 by close of trade, up 0.22% for the day but still 0.86% lower for the week.
The pair is likely to find support at 0.9276, the low from August 1 and resistance at 0.9387, the high from July 30.
The U.S. Department of Labor said Friday that non-farm payrolls rose by a seasonally adjusted 209,000 in July, below expectations for an increase of 233,000.
The unemployment rate ticked up to 6.2% last month from 6.1% in June. Analysts had expected the jobless rate to hold steady at 6.1% in July.
The disappointing jobs report dampened optimism over the strength of the labor market and reduced expectations that the Federal Reserve will begin to raise rates sooner than previously thought.
The Aussie also found support after official data released Friday showed that China's manufacturing purchasing managers’ index rose to a two-year high of 51.7 in July from 51.0 in June, beating market expectations for a 51.4 reading.
Still, China's HSBC final manufacturing PMI for July ticked down to 51.7 from a preliminary reading of 52.0. Analysts had expected the index to remain unchanged.
The Asian nation is Australia’s largest trade partner.
The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. economy expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.
Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the Australian dollar in the week ending July 29.
Net longs totaled 39,606 contracts, up from net longs of 38,793 in the preceding week.
In the week ahead, investors will be looking ahead to Tuesday’s rate decision by the Reserve Bank of Australia, as well as highly-anticipated Australian July employment data scheduled for Thursday.
Monday, August 4
- Markets in Australia are to remain closed for a national holiday; however the country is still to release data on retail sales.
Tuesday, August 5- Australia is to release data on the trade balance, the difference in value between imports and exports.
- The
RBA is to announce its benchmark interest rate and publish its monetary
policy statement, which outlines economic conditions and the factors
affecting the monetary policy decision.
- Later Tuesday,
the U.S. is to publish data on factory orders, while the Institute of
Supply Management is to release data on service sector growth.
Wednesday, August 6- The U.S. is to publish data on the trade balance.
Thursday, August 7- Australia is to release data on the change in the number of people unemployed and the unemployment rate.
- The U.S. is to publish the weekly report on initial jobless claims.
Friday, August 8The dollar fell against the other major currencies on Friday after a weaker-than-expected jobs report for July tempered expectations that U.S. rates could rise sooner than anticipated.
The Labor Department reported that that U.S. economy added 209,000 jobs in July, below forecasts for jobs growth of 233,000. The previous month’s figure was revised up to a gain of 298,000 from a previously reported increase of 288,000.
Although it was the sixth successive month that the U.S. economy added more than 200,000 jobs, the unemployment rate unexpectedly ticked up to 6.2% from 6.1% in June. In addition, wage growth was flat, pointing to underlying slack in the economy.
The data prompted investors to trim back expectations on the timing of a possible rate hike by the Federal Reserve, sending the dollar lower.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.19% at 81.39 late Friday, off Thursday’s 10 month highs of 81.66.
The greenback had rallied earlier in the week, as strong economic data underlined the view that the recovery is gaining momentum. Official data on Wednesday showed that U.S. economy expanded at an annual rate of 4.0% in the three months to June, outstripping forecasts of 3.0%.
USD/JPY was down 0.18% to 102.61 late Friday, but still ended the week with gains of 0.84%.
EUR/USD added 0.29% to trade at 1.3429 late Friday, backing away from Wednesday’s eight month trough of 1.3366. The euro remained under pressure after data on Thursday showed that the annual rate of inflation in the euro zone slowed in July.
The weak data added to pressure on the European Central Bank to implement further stimulus measures to shore up growth and stave off the threat of deflation in the currency bloc.
The pound was also lower against the dollar on Friday, with GBP/USD down 0.38% to 1.6822 at the close, bringing the week’s losses to 0.94%.
The drop in sterling came after data on Friday showed that the U.K. manufacturing sector expanded at the slowest pace in a year in July.
In the week ahead, investors will be focusing on the outcomes of a spate of central bank meetings, with the ECB, the Bank of Japan, the Bank of England and the Reserve Bank of Australia all to hold monetary policy assessments.
The latest employment reports from Australia, New Zealand and Canada will also be closely watched.
Monday, August 4
- Markets in Australia are to remain closed for a national holiday; however the country is still to release data on retail sales.
- In the euro zone, Spain is to produce a report on the change in the number of people employed.
- Elsewhere in Europe, Switzerland is to publish its SVME PMI.
- The U.K. is to publish data on construction sector activity.
- Markets in Canada are to remain closed for a national holiday.
Tuesday, August 5- Australia is to release data on the trade balance, the difference in value between imports and exports.
- The
RBA is to announce its benchmark interest rate and publish its monetary
policy statement, which outlines economic conditions and the factors
affecting the monetary policy decision.
- China is to publish the HSBC services PMI.
- The euro zone is to release data on retail sales, while Spain and Italy are to produce reports on service sector activity.
- The U.K. is also to release a report on service sector expansion.
- Later
Tuesday, the U.S. is to publish data on factory orders, while the
Institute of Supply Management is to release data on service sector
growth.
Wednesday, August 6- New Zealand is to release data on the change in the number of people unemployed and the unemployment rate.
- Germany is to publish a report on factory orders.
- Switzerland is to release a report on consumer price inflation.
- The U.K. is to produce data on manufacturing and industrial production.
- Later in the day, both the U.S. and Canada are to publish data on the trade balance.
Thursday, August 7- Australia is to release data on the change in the number of people unemployed and the unemployment rate.
- The
Swiss National Bank is to publish data on its foreign currency
reserves. This data is closely scrutinized for indications of the size
of the bank’s operations in currency markets.
- The ECB
is to announce its benchmark interest rate. The announcement is to be
followed by a press conference with President Mario Draghi.
- The BoE is also to announce its benchmark interest rate, following its monthly rate review.
- Canada is to produce reports on building permits and the Ivey PMI.
- The U.S. is to publish the weekly report on initial jobless claims.
Friday, August 82014-08-04 01:30 GMT (or 03:30 MQ MT5 time) | [AUD - Retail Sales]
if actual > forecast = good for currency (for AUD in our case)
[AUD - Retail Sales] = Change in the total value of sales at the retail level. It's the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
==========
Australia Retail Sales Rebound In June; Exceed Expectations
Australia's retail sales recovered more than expected in June, data from the Australian Bureau of Statistics showed Monday.
Retail turnover rebounded by a seasonally adjusted 0.6 percent month-on-month in June following the 0.3 percent decline in May. Economists had expected a 0.3 percent rebound in sales.
Sales of household goods grew the most, by 1.7 percent in June following the 0.2 percent increase in May.
Clothing, footwear and personal accessory sales recovered by 1.4 percent, after the 2.8 percent drop in May.
Other retail sales also rebounded in June, by 0.9 percent. This follows the 0.3 percent fall in May.
AUDUSD - Aussie/dollar still within confines of trading range
The AUDUSD did break down through support near 0.9320 last week, but it’s still confined within a large trading range between 0.9450 resistance and key support level down near 0.9200. If price continues falling and tests that key 0.9200 support, we will watch for price action buying opportunities from there, to trade back up toward the range resistance.
NZDUSD - Kiwi/dollar showing signs of firming up near support
The NZDUSD found some buyers toward the end of last week as the market pushed slightly higher on Thursday and Friday. Price has fallen down close to the key support near 0.8400, but isn’t quite there yet. We could wait for a buy signal from that key 0.8400 support level or wait for the market to retrace higher and watch for a price action sell signal from resistance to trade back in-line with this recent bearish momentum.
2014-08-05 01:45 gmt (or 03:45 mq mt5 time) | [cny - hsbc services pmi]
if actual > forecast = good for currency (for aud in our case)
[cny - hsbc services pmi] = level of a diffusion index based on surveyed purchasing managers in the services industry. it's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.
==========
china services pmi slides to flat in julythe services sector in china slipped to no change in july, the latest survey from markit economics revealed on tuesday in its latest performance of service index - which came in with a score of 50.0.
that's down from 53.1 in june.
a score below 50 signals contraction in a sector, while a reading above 50 means expansion.
2014-08-05 04:30 GMT (or 06:30 MQ MT5 time) | [AUD - Cash Rate]
if actual > forecast = good for currency (for aud in our case)
[AUD - Cash Rate] = interest rate for overnight money market deposits. short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future
==========
Australia Maintains Record Low Interest RateThe Reserve Bank of Australia left its key interest rate unchanged once again at record-low as policymakers reiterated their thinking that the most prudent course is likely to be a period of stability in interest rates.
The monetary policy board governed by Glenn Stevens decided to keep the cash rate unchanged at 2.50 percent as widely expected. The rate has been at the current historic-low level since August 2013.
The RBA has reduced its benchmark rate by a cumulative 225 basis points since November 2011 to help the economy sustain the economic growth amid fading support from the mining boom.
Daniel Martin, an Asia economist at Capital Economics, said rate hikes are a long way off. If the RBA does make a change within the next six months, it is likely to be a rate cut.
2014-08-05 22:45 GMT (or 00:45 MQ MT5 time) | [NZD - Unemployment Rate]
if actual > forecast = good for currency (for NZD in our case)
[NZD - Unemployment Rate] = Percentage of total work force that is unemployed and actively seeking employment during the previous quarter. Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions.
==========
New Zealand Q2 Jobless Rate Drops More Than Expected
The unemployment rate in New Zealand decreased more than expected in the second quarter while participation rate declined, data showed Wednesday.
The jobless rate came in at 5.6 percent in the second quarter, figures from Statistics New Zealand showed.
This was less than the jobless rate of 5.9 percent in the first quarter and the 5.8 percent rate expected by economists.
The number of employed people rose 3.7 percent year-over-year in the second quarter, the same rate as in the previous quarter. Economists had expected the number of employed people to increase 4 percent.
On a quarter-over-quarter basis, employment increased 0.4 percent, which was slower than the 0.9 percent in the first quarter and the 0.7 percent consensus estimate.
Meanwhile, the participation rate fell to 68.9 percent from 69.2 percent in the first quarter. Economists expected the participation rate to rise to 69.3 percent.
AUDIO - Currency Markets with Rick Wright (based on fxstreet article)
As trading ranges plummet with most currencies, Master trader, Rick Wright joins Merlin to discuss how he is adapting. He offers some personal insights into how traders should modify plans and tactics to find trading opportunities when seemingly none exist. Merlin and Rick also look at the Euro, Yen, and Pound for potential trading opportunities.
