In line with yesterday’s economic releases, all pointers were that there was a USD sell off. To begin with, the much anticipate Empire State Manufacturing Index fell below the 0.0 level to -4.2 in July and came in tandem with already worse June’s ISM and Non-ISM manufacturing indices. Further, investment and expenditure by Americans subdued the most last month as shown by TIC long Term purchases which came in at -$3.6B from $46.2B expected. Cumulatively, all these streams of negative data helped pushed the kiwi up towards the 0.730 level. Earlier today we also saw the release of RBA monetary policy minutes and it provided a clear snapshot of what really drove the Aussie-and by contagion Kiwi up. It is worth noting that both economies are strongly dependent on china’s growth and Housing data. RBA and earlier, RBNZ pointed to improving labor conditions and a slowdown in housing growth and extension. They remain optimistic about next quarter GDP and inflation, and it therefore drove both currencies up in the Asian session.
As the European session gets underway, our game plan is to check for strong signals today pointing for sells. We shall pay attention to today’s US CPI and Building Permits data set to be released at 1230GMT today and then later NZD GDT index to be released at a tentative time-usually around 1430GMT.
Our plan is to short at all highs today in the 15 min chart as follows:
Up until now, the upward momentum has been high, I expect this to correct in the London and NY session according to my chart above though the bullish momentum is strong.
Sell Limit: 0.727-0.728
Have a good trading day.