News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 93.70%, while traders in France 40 are at opposite extremes with 79.47%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/Su4dGQMLg4
  • The primary point of worry for the FOMC is labor and tomorrow brings the July NFP report out of the United States. Get your market update from @JStanleyFX here:https://t.co/fur0ydizSn https://t.co/dcKE8AQ7iC
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.01% Gold: -0.32% Silver: -0.47% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/g6LLOsLFrU
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.39% 🇦🇺AUD: 0.38% 🇬🇧GBP: 0.29% 🇪🇺EUR: 0.03% 🇨🇭CHF: 0.00% 🇯🇵JPY: -0.22% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/CR6bZ5U1S0
  • US Dollar Pre-NFP Price Action Setups: EUR/USD, GBP/USD, USD/CAD https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2021/08/05/US-Dollar-Pre-NFP-Price-Action-Setups-EUR-USD-EURUSD-GBP-USD-GBPUSD-USDCAD-USD-CAD-Loonie-Levels.html https://t.co/0fxVqtsBnk
  • Indices Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.55% US 500: 0.44% FTSE 100: 0.03% Germany 30: 0.01% France 40: -0.05% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/gZNgHVv9Ef
  • Heads Up:🇷🇺 Inflation Rate YoY (JUL) due at 16:00 GMT (15min) Expected: 6.6% Previous: 6.5% https://www.dailyfx.com/economic-calendar#2021-08-05
  • The price of crude oil is generally sensitive to rising tensions in the Middle East and might have been expected to have strengthened on the current hostilities in the region.Get your #crude oil market update from @MartinSEssex here:https://t.co/Choyp736tY https://t.co/F5V0B3y6F1
  • Ascending wedge, price support in view. Quantitative evidence is supportive of bullish view. Get your market update from @PaulRobinsonFX here:https://t.co/qQN80WFnQm https://t.co/g6Ev1YdVXr
  • fresh all time highs for the Nasdaq 100 $NQ https://t.co/exsisFWnUE
Russell 2000 Index May Continue to Rise on Rotation Trade, AUD/NZD Eyes RBNZ

Russell 2000 Index May Continue to Rise on Rotation Trade, AUD/NZD Eyes RBNZ

Thomas Westwater, Analyst

AUD/NZD, RBNZ, US Yield Curve – Talking Points

  • Investors in US equity indexes continue to rotate out of tech following risk clarity post-election
  • Their outlook on the economy may be strengthening as 10-year Treasury yields climb
  • AUD/NZD may strengthen if RBNZ signals further willingness to shift to negative rates
Advertisement

The Dow Jones Index closed 0.90% higher on the day while the Russell 200 Index rocketed over 5%, its highest level since August 2018. Meanwhile, the tech-heavy Nasdaq 100 Index closed 1.74% lower, marking a second consecutive daily loss. The divergence in price action shows a classic rotation trade among investors. At the same time, the 10-year Treasury yield neared 1%, as back-end tenors on the yield curve rise, signaling confidence in investor outlooks.

Russell 2000, Nasdaq 100, U.S. 10-Year Yield – 30 Min Chart

Russell 200 index, NDX, TNX

Chart created with TradingView

The rotation away from tech stands in stark contrast to the story seen since late March. It likely owes to several headline risks that have driven market sentiment, such as Covid and the U.S. Presidential Election, gaining clarity over the past week. That said, markets appear to be continuing to price in growth, but the rebalancing signals that high-growth tech stocks may be falling out of favor.

Wednesday’s Asia Pacific Trading Session

The Reserve Bank of New Zealand’s interest rate decision is slated to cross the wires today. According to the DailyFX Economic Calendar, the RBNZ is expected to hold rates steady at 0.25%. Granted, traders will still key in on any details surrounding the outlook, particularly any hints on the central bank’s path towards taking interest rates negative.

Overnight index swaps are pricing in a cut that would take rates negative next year. And most economists also expect the bank to go negative. Still, we may not get a rate projection from today’s decision. Following last week’s RBA decision that cut rates to 0.10% from 0.25%, any guidance that suggests the RRBNZ is shifting further towards negative rates may see AUD/NZD strengthen.

Currently, AUD/NZD continues to trade within a downward channel since pivoting off a multi-year high in August. Tensions between China and Australia have weighed on the Australian Dollar in recent months due to trade disputes. The 200-day moving average, currently at 1.0644, is in play.. A break lower would likely see another retest of the bottom of the channel, and a break higher would aim to test the upper bound.

AUD/NZD – Daily Chart

AUD/NZD Price Chart

Chart created with TradingView

Written by Thomas Westwater, Analyst for DailyFX.com

Contact Thomas at @FxWestwater

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES