The Week Ahead: Patience Is A Virtue

GBPNZD Trades in Range for Lack of Catalyst

Despite the Brexit noise, the pound has been grinding its way up against the New Zealand dollar. As major contentions around fair competition and fisheries linger, negotiations could run well up to the last minute.

Both sides’ refusal to give in last week was the latest show of power struggle, yet officials have advertently kept the door open, thus preventing an abrupt sell-off in the market. The pound may stay volatile for lack of a clear direction.

As long as the pair remains above the double bottom around 1.9050, there is the hope of a meaningful rebound. On the upside, 2.0000 is a key psychological hurdle.

USDCHF Recovers as Stimulus Talks Go On

The US dollar is making its way back as the much-anticipated fiscal deal struggles to materialize. Democrats have set this Tuesday as the deadline, and a deal could renew the pressure on the dollar.

In the meantime, however, it might still be able to enjoy some breathing room. Sell-offs in riskier assets are mirrored by USD short-covering. These are signs of markets adjusting their positions ahead of the election, a major risk event that prompts investors to convert some of their holdings into a relatively safer dollar.

The pair has found support above 0.9050. A bullish breakout above 0.9300 could trigger a rally toward 0.9450.

AUDJPY Falls as Rate Cut Looms

The Australian dollar took a nosedive after Reserve Bank of Australia Governor Philip Lowe signaled further interest rate cuts. This came out as a confirmation of what markets have anticipated.

Though what is really hurting the Aussie is the possibility of the central bank expanding its quantitative easing program for an extended period of time. This would suggest a lengthy economic recovery. Within this bearish picture, a positive retail sales number this week may well see traders selling into strength.

The pair is testing the major level of 74.00 and a downside breakout could bring more sellers on board.

EURCAD Falls on Steady Oil Prices

The Canadian dollar might have fallen victim to the collateral damage of the postponement of the US stimulus. Uncertainty over its big neighbor’s upcoming political color and pace of recovery mean there is hesitation in loading up the export-dependent loonie.

Fortunately, oil prices, Canada’s major export, have been holding up well near recent highs, effectively providing support to the currency.

The euro is bouncing back after it broke below 1.5430. However, this rally could be short-lived as it meets selling interests around 1.5650. A fading momentum would lead to a reversal into 1.52s.

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About the Author
“John Benjamin Resident Analyst at Orbex. John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.” [space height="10"] At Orbex, we are dedicated to serving our clients responsibly with the latest innovations in forex tools and resources to assist you in trading. Please Director at Visit our site for more details.

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