Early today, the NZD Quarterly Inflation Data was released and since this is one of those important economic data that is closely watched by the RBNZ, some volatility was expected, for one, a little bit of improvement was noted with data recording a +0.01% improvement at 1.64% from previous 1.63%-the second lowest inflation expectation since the last quarter of 2004 by the way. With this we can conclude that despite the very low inflation level, at least the RBNZ monetary policies are filtering through and businesses are expecting rise in prices of goods.
Secondly, NY Manufacturing data, it plummeted this month to -9.2% against 7.2%e and this meant contraction. After this data was released we saw that NZD gained ground before price action retraced to the 0.678 regions at the close of NY session. Now with these data let’s see what happened on the charts:
Daily Chart Analysis
Technically speaking, the daily range for this pair has been on a down trend from last month’s average of 77 and now it is 7 pips lower at 70. Another thing of importance is the behavior of the 5 month’s daily resistance which at the moment is acting as a strong impregnable barrier with strong selling every time price action approaches it. Both OBV and stochastics are showing an increasing momentum in the days to come with formation of a double bottom in the oversold region of the stochastics by the OBV and by close of yesterday candle, stochastics printed a buy signal. One this is for certain and our shorts will be nullified only if there is a strong break above the resistance zone and then price close above the 20 day moving average which is the middle band of the BB.
We shall also be looking at the Building Approval data set to be released today with 1.13e from previous 1.09 and then the all important CPI with expectation of inflation at 0.3% from last month’s 0.1% with prices of food and other household items expected to change prices by 0.2% from last month’s 0.1%. It will be also good to watch what the utilization capacity rate will be today with forecast at 75.1% from 74.8% as we know that as producers continue to increase their production capacity, inflation will surely increase as producers will increase their wholesale prices. From NZD, check what will be recorded from their weekly GDT Price index.
4 Hour Chart Analysis
It is clear from the charts that both volumes and momentum are on the rise and since volume precedes price, we shall expect a rally upward where the resistance zone will be tested. Watch what will happen and if that double tops formed last week will be broken through it appears there is formation of an ascending triangle at the moment with price forming a series of higher highs and lower highs as volumes are added.
15 Minutes Chart Analysis
From the Asian session, the 61.8 Fibonacci level acted as an anchor and support for price to rally upward just after the formation of that strong buy signal in the oversold region of the stochastics. Price rallied upwards and reversed sharply with the released of Quarterly Inflation Expectation with that reversal double bar moments after the resistance line had been breached. Price action though struck the 161.8 Fibonacci Level. We expect price to fall back maybe to the 50-38.2 Fibonacci level and depending on the news filtering in later today in the NY open, we can trade accordingly.
Otherwise have a pipful day.