GBP/NZD in focus ahead of retail sales from NZ, UK
Fawad Razaqzada February 16, 2017 11:21 PM
<p>As we approach the end of an eventful week, things are starting to unwind and the economic calendar is beginning to look empty. The only […]</p>
As we approach the end of an eventful week, things are starting to unwind and the economic calendar is beginning to look empty. The only notable market-moving data left for this week are retail sales from New Zealand (tonight) and Britain (tomorrow). Consequently, the GBP/NZD will be in focus. This volatile pair rallied sharply last week when the RBNZ signalled it won’t be cutting interest rates for a long time. But soft UK inflation and wages data has weighed on this pair this week, causing it to remain within its established range. Will the retail sales data from the two nations cause it to make a more decisive move at the end of this week? Time will tell. But the headline New Zealand retail sales are expected to come in at 1.1% quarter-on-quarter in Q4 versus 0.9% in Q3. Core sales are seen rising 0.9% on the quarter compared to 0.3% previously. Meanwhile UK retail sales are seen rebounding 1.0% in January after an unexpected 1.9% drop in December.
From a technical perspective, the long-term bias remains finely in balance for the GBP/NZD. But we have seen a few bullish signs of late, not least that big bullish engulfing candle on February 7, which preceded the rally to the 1.7450-85 resistance area last week. What’s more, there is also a bullish engulfing candle on the weekly time frame, too (see the inset). But because of the slightly weaker UK data this week, the buyers have not exerted further buying pressure on this pair, so there hasn’t been any follow-through. It could be that this group of market participants are waiting for a deeper pullback to go long again, or perhaps a break above the resistance range. One key support level to watch is around 1.7125, which was the last short-term resistance prior to last week’s rally. Once resistance, this level could be the new support to watch. If price does not get to this level before it takes off to move above the 1.7450-85 range, then the bulls who are currently on the side-lines may consider trading the breakout. However, if the low from last week gives way then this will invalidate our short-term bullish view.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.