It’s FOMC day so you know I got my eyes on a dollar pair today!
What do you think of NZD/USD’s short-term consolidation?
Before moving on, ICYMI, yesterday’s watchlist looked at USD/CHF’s consolidation ahead of the U.S. PPI release. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. headline (0.8%) and core (0.7%) PPIs print higher than expected, annualized rate (9.6%) hits new all-time highs
Gov Orr: RBNZ will eventually raise rates to above 2% neutral rate
Treasury: New Zealand to return to budget surplus in 2023/24, two years ahead of schedule
Australia’s consumer sentiment slips by 1% to 104.3, still above 100.0 optimism level in November
BOJ’s Kuroda says inflation may approach 2% target
China’s retail sales slows down from 4.9% to 3.9% in November
China’s fixed-asset investment at a slower 5.2% (from 6.1%) in the year to November
China’s industrial production in line with 3.8% growth expectations
BOJ offers 3rd consecutive daily cash injection to combat rising short-term rates
U.K. inflation soars to 10-year high of 5.1% as cost of living squeeze tightens
Canada’s inflation reports at 1:30 pm GMT
U.S. retail sales data at 1:30 pm GMT
BOC Governor Macklem to give a speech at 5:00 pm GMT
FOMC policy statement and projections at 7:00 pm GMT
FOMC Gov Powell’s presser at 7:30 pm GMT
New Zealand’s quarterly GDP at 9:45 pm GMT (Dec 16)
Australia’s labor market data at 12:30 am GMT (Dec 16)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: NZD/USD
Forex traders are in for a BUSY trading session or two with Canada’s inflation, U.S. retail sales, New Zealand’s GDP, and Australia’s jobs data on tap.
Oh, and then there’s the not-so-small matter of the Fed’s December policy decision and projections.
Based on how traders reacted to the record-high U.S. PPI (hey, it rhymes!), markets now expect Governor Powell and his team to step up their tapering game. Why taper only $15 billion a month when you can at least double the pace, amirite?
All the FOMC hype got me lookin’ at NZD/USD, which is stuck inside a falling wedge pattern after dropping sharply and steadily in November.
If the FOMC gang dramatically moves up its tapering schedule or if members favor more than one rate hike in 2022, then USD would shoot up across the board and drag NZD/USD with it.
NZD/USD could break below the wedge support and hit the .6600 area of interest seen in the higher time frames.
But if JPow and his friends take the conservative road and only speed up their tapering by a bit, or if they convince markets that there won’t be at least two rate hikes next year, then USD will feel the boos from the undelivered hype.
The New Zealand dollar, which is already enjoying the Reserve Bank of New Zealand’s (RBNZ) assurance that it would keep raising rates – could pop up against the Greenback and take NZD/USD to the .6900 and .7000 inflection points.