The US dollar index keeps rounding above the 103.60 historical support level. The buyers have already defended this level for three weeks, highlighting their interest in the greenback. Thus, buying USD looks less risky right now.
Can you trade the NZD on the interest rate release?
The RBNZ releases its interest rate and gives a press conference at 03:00 MT time on Wednesday.
Instruments to trade: NZD/USD, AUD/NZD, NZD/JPY
The last release of the interest rate by the Reserve Bank of New Zealand was quite a surprise. The market was expecting to see a 0.25 rate cut, but the bank informed that there was no need for that and kept the rate at 1%.
The rate was at 1.75% throughout 2018, then after two cuts in 2019, it came to 1%, where it is now. When the RBNZ went against forecasts on November 13, the NZD got a big boost.
It rose by approximately 80 pips against the USD, consequently getting out of the sideways movement and entering an upswing, which lasted until the beginning of January.
Hence, the NZD may receive another push upwards from the bank, as long as the latter sees the economy strong enough to keep the rate at the present level. At the same time, things have changes since November, with the coronavirus and everything, so be attentive and manage the risks.
- If the RBNZ is hawkish, the NZD will rise.
- If the RBNZ is dovish, the NZD will drop.
On the H4 timeframe, the US dollar index has formed a bullish falling wedge. At the beginning of the trading session, the price is testing the upper border of this wedge. Thus, in case of a higher-than-expected Core PCE Price Index m/m, the US dollar will skyrocket against other currencies.
Happy Wednesday, traders! We went through the Internet and found the best news for you, take a look!
This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.