Today’s PBOC rate cut didn’t impress market players much!
I’m looking at this NZD/USD triangle pattern in case a breakdown is in sight.
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
New Zealand trade deficit widened from 0.11B NZD to 1.11B NZD in July as exports fell 14% while imports tumbled 16% during the month
PBOC cut its 1-year prime loan rate from 3.55% to 3.45% vs. 3.40% forecast and kept its 5-year rate steady at 4.20% instead of cutting to the 4.05% consensus
New Zealand credit card spending up by 3.6% year-over-year in July, slower than earlier 5.1% and indicative of weaker consumer spending
German producer prices slumped by 1.1% month-over-month in July vs. estimated 0.1% dip and earlier 0.3% decline
Price Action News
It’s a bit of a slow start to the week in terms of top-tier economic releases, giving market players room to react to the People’s Bank of China‘s disappointing announcement.
Many had been counting on the central bank to be more aggressive with their easing efforts now that economic data has been subpar and some property companies are in need of a boost. However, the PBOC simply delivered a smaller cut to its 1-year loan prime rate and even kept its 5-year rate unchanged.
With that, the Aussie and Kiwi stumbled early in the Asian session, as traders are likely anticipating more pain for the commodity sector and a fresh round of risk-off flows.
Upcoming Potential Catalysts on the Forex Economic Calendar:
Japan’s BOJ core CPI at 5:00 am GMT (Aug. 22)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
NZD/USD: 15-min
The Kiwi is off to a shaky start so far, bogged down by risk aversion from the previous trading week and facing another round of bearish pressure after the PBOC announcement failed to impress.
NZD/USD is still stuck inside its descending triangle pattern, though, with support at the .5910 region holding.
A break below this area and S1 (.5900) could be followed by a drop to the next support zone at S2 (.5890) or a selloff that’s the same height as the formation.
Don’t forget that New Zealand also printed a couple of disappointing figures earlier on, with its trade balance reflecting declines in both imports and exports plus its credit card spending data suggesting slower domestic consumption.
There are no major events lined up in the next few trading sessions, so market players might keep taking directional clues from overall market sentiment.
Make sure you account for the average NZD/USD volatility when trading this one!
