Source: PaxForex Premium Analytics Portal, Fundamental Insight
The New Zealand Current Account Balance for the second quarter came in at -NZ$5.22B quarterly monthly and -NZ$27.82B annualized, with the Current Account-to-GDP Ratio at -7.7%. Economists predicted a figure of -NZ$4.70B, -NZ$26.65B, and -7.4%. Forex traders can compare this to the New Zealand Current Account Balance for the first quarter, reported at -NZ$6.50B quarterly and -NZ$23.27B annualized, with the Current Account-to-GDP Ratio at -6.5%.
The Japan Reuters Tankan Index for September came in at 10. Forex traders can compare this to the Japan Reuters Tankan Index for August, reported at 13.
Japanese Machine Orders for July increased 5.3% monthly and 12.8% annualized. Economists predicted a decrease of 0.8% and a rise of 6.6%. Forex traders can compare this to Japanese Machine Orders for June, which expanded 0.9% monthly and 6.5% annualized.
Final Japanese Industrial Production for July rose 0.8% monthly and decreased 2.0% annualized. Forex traders can compare this to Japanese Industrial Production for June, which surged 9.2% monthly and dropped 2.8% annualized. Capacity Utilization for July increased by 2.4% monthly. Forex traders can compare this to Capacity Utilization for June, which expanded 9.6% monthly.
US CPI data for August reminded financial markets that inflation became deeply entrenched as central banks, led by the US Federal Reserve, failed to realize the errors of their policy mistakes since the global financial crisis of 2008. Many traders focused on the decrease in gasoline prices in the US, ignored warnings of widespread inflation, and believed the US central bank could slow the pace of its monetary tightening. The CPI report showed that despite the plunge at the pump, price pressures expanded with rent, food, new car prices, and medical costs surging. More volatility over the next few sessions could extend existing trends, like the correction in the NZD/JPY.
The forecast for the NZD/JPY remains bearish following a false breakout above its horizontal resistance area. This currency pair reversed the brief price spike, but volatility is expected to remain elevated as bulls and the upward drifting Tenkan-sen battle bears and the flat Kijun-sen for control over the next move. The Ichimoku Kinko Hyo Cloud confirms the lack of bearishness and maintains its narrow, sideways drift. Traders should monitor the CCI after it has completed a breakdown from extreme overbought territory. It now races towards the zero level, and a breakdown could provide bears with the necessary catalyst to accelerate the correction. Can bears overpower bulls and pressure the NZD/JPY into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the NZD/JPY remain inside the or breakdown below the 86.000 to 86.750 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 86.350
- Take Profit Zone: 83.700 – 84.350
- Stop Loss Level: 87.350
Should price action for the NZD/JPY breakout above 86.750, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 87.350
- Take Profit Zone: 87.650 – 88.550
- Stop Loss Level: 86.750
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