NZD/JPY’s Range Creates Short Opportunity
How stable is the NZD/JPY Range?
Trading Tip – Risk appetite continues to defy the odds and further support for the high yielding “Kiwi” isn’t out of the question. Greece’s troubles appear to be behind them which have brought a sense of relief to the market. Improving fundamentals-UK jobless claims unexpectedly fell- continue to point toward continues growth. Ad in central banks willingness to keep rates at record low levels and the short-term prospects for growth remain firm. However, policy makers are reluctant to begin tightening as they continue to see downside risks which may reveal themselves and derail the bullish trend. Therefore, failure at 65.00 isn’t a clear enough sign that a reversal is in order, which is why and am waiting fro a break below support levels to initiate a short position. A more risk adverse investor could wait until the Fibo level is broken and forgo potential profits for a safer bet.
Event Risk for New Zealand and Japan
New Zealand – There is only second tire release remaining for the rest of the week which will present little in the form of event risk. However, next week’s GDP report will have significant market moving potential as the growth figures will show if the antipodes nations’ recovery is on a robust pace. The “Kiwi” has benefitted from its counterpart the RBA raising rates which has boosted its own yield expectations. However, if it’s pace of recovery doesn’t match then we may see a sharp reversal as markets will push out the horizon for an expected rate hike.
Japan – The BoJ revealed very little in their post rate decision remarks expect that they weren’t adding any quantitative easing measures at this time. The policy decision may have been the only fundamental release which has any market moving potential. Therefore upcoming fundamental data will could very little influence on price action. The quarterly reading of BSI large manufacturing has the most potential as it is a key gauge of economic activity with the BoJ monthly report, industry activity index and trade balance providing insight onto the state of the economy.
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