NZDUSD posts a strong week
Gary Christie October 23, 2020 5:43 PM
A bullish continuation pattern is in the works: Chart
The US Dollar was bearish against most of its major pairs on Friday with the exception of the GBP. On the US economic data front, Markit's U.S. Manufacturing Purchasing Managers' Index rose to 53.3 on month in the October preliminary reading (53.5 expected), from 53.2 in the September final reading.
On Monday, New Home Sales for September are expected to rise to 1,025K on month, from 1,011K in August.
The Euro was bullish against all of its major pairs. In Europe, the U.K. Office for National Statistics has reported September retail sales at +1.5% (vs +0.2% on month expected). Research firm Markit has published preliminary readings of October Manufacturing PMI for the Eurozone at 54.4 (53.0 expected), for Germany at 58.0 (vs 55.0 expected), for France at 51.0 (vs 51.0 expected) and for the U.K. at 53.3 (vs 53.1 expected). Also, the preliminary readings of October Services PMI were published for the Eurozone at 46.2 (vs 47.0 expected), for Germany at 48.9 (vs 49.4 expected), for France at 46.5 (vs 47.0 expected) and for the U.K. at 52.3 (vs 53.9 expected).
The Australian dollar was bullish against all of its major pairs.
On last week's U.S. economic data front:
Markit's U.S. Manufacturing Purchasing Managers' Index rose to 53.3 on month in the October preliminary reading (53.5 expected), from 53.2 in the September final reading.
Regarding the U.S. job market, Initial Jobless Claims dropped to 787K for the week ending October 17th (870K expected), from a revised 842K in the week before. Continuing Claims fell to 8,373K for the week ending October 10th (9,625K expected), from a revised 9,397K in the previous week.
Looking at housing data, Existing Homes Sales increased to 6.54 million on month in September (6.30 million expected), from a revised 5.98 million in August, a level last reached in mid 2006. The Mortgage Bankers Association's Mortgage Applications slipped 0.6% for the week ending October 16th, compared to -0.7% in the prior week. Finally, Housing Starts rose to 1,415K on month in September (1,465K expected), from a revised 1,388K in August.
The Federal Reserve's Beige Book stated that all districts have seen continued growth at a moderate pace since the downturn, however there is concern about the restaurant industry as cold weather approaches since they have relied on outdoor dining. Employment increased across all districts, although growth remained slow. Prices rose modestly across all districts, most notably consumer prices of food, automobiles and appliances increased significantly.
The largest FX pair gainer of the week was the NZD/USD which gained 1.26% or 83 pips. Looking at a daily chart of the NZD/USD, a diamond continuation pattern is taking shape. The preference is for a break to the upside which would signal a continuation of the uptrend that started back in March at the pandemic lows. A break above 0.6795 resistance would be the signal bulls are waiting for. However, a break below 0.6485 support would be a bearish signal with a decline to the next major support level likely at 0.638.
Source: GAIN Capital, TradingView
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.