Following yesterday’s latest recession signal provided by the Sentix Investor Confidence Index, forex traders received credit card data out of New Zealand which showed a monthly decrease in spending. The New Zealand Dollar remains well supported in the short-term. Chinese consumer prices rose as food prices accelerated to the upside. Forex traders appear to be content with more tariff threats out of the US towards China and are in a holding pattern until the conclusion of the G-20 summit in Japan at the end of the month. Forex trading strategies have made short-term adjustments, but how will this impact the NZDUSD?
Here are the key factors to keep in mind today for New Zealand Dollar trades:
- New Zealand Credit Card Spending: New Zealand Credit Card Spending for May decreased by 0.5% monthly and increased by 3.2% annualized. Economists predicted an increase of 0.7% and of 1.6%. Forex traders can compare this to New Zealand Credit Card Spending for April which increased by 0.6% monthly and by 4.5% annualized.
- New Zealand Migration: Permanent/Long-Term Migration for April was reported at 4,870. Forex traders can compare this to Permanent/Long-Term Migration for March which was reported at 4,630. Visitor Arrivals for April decreased by 3.1% monthly and External Migration & Visitors increased by 8.3% monthly. Forex traders can compare this to Visitor Arrivals for March which increased by 2.4% monthly and to External Migration & Visitors which decreased by 2.6% monthly.
- Chinese PPI and Chinese CPI: The Chinese PPI for May increased by 0.6% annualized and the Chinese CPI increased by 2.7% annualized. Economists predicted an increase of 0.6% and of 2.7%. Forex traders can compare this to the Chinese PPI for April which increased by 0.9% annualized and to the Chinese CPI which increased by 2.5% annualized.
The US Dollar is under pressure as calls for an interest rate cut are on the rise. The out-performance of the US Dollar was largely due to the US Fed’s interest rate increases; as the central bank is on the cusp of a policy reversal the US Dollar is set to retrace its gains. Inflationary pressures remain absent and forex trader’s are likely to see a continuation of this trend with the release of the May CPI data. Wage inflation is also non-existent and today’s real average hourly earnings report is expected to confirm. FX trading may be muted until after the release of today’s economic data out of the US.
Here are the key factors to keep in mind today for US Dollar trades:
- US CPI and Core CPI: The US CPI for May is predicted to increase by 0.1% monthly and by 1.9% annualized. Forex traders can compare this to the US CPI for April which increased by 0.3% monthly and by 2.0% annualized. The US Core CPI for May is predicted to increase by 0.2% monthly and by 2.1% annualized. Forex traders can compare this to the US Core CPI for April March which increased by 0.1% monthly by 2.1% annualized.
- US Real Average Hourly Earnings: US Real Average Hourly Earnings for May are predicted to increase by 0.1% monthly and by 1.2% annualized. Forex traders can compare this to US Real Average Hourly Earnings for April which decreased by 0.4% monthly and which increased by 1.2% annualized.
- US Monthly Budget Statement: The US Monthly Budget Statement for May is predicted at -$185.5B. Forex traders can compare this to the US Monthly Budget Statement for April which was reported at $160.3B.
Should price action for the NZDUSD remain inside the or breakout above the 0.6560 to 0.6610 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.6575
- Take Profit Zone: 0.6745 – 0.6835
- Stop Loss Level: 0.6510
Should price action for the NZDUSD breakdown below 0.6560 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.6535
- Take Profit Zone: 0.6460 – 0.6480
- Stop Loss Level: 0.6560
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