Weekly Market Outlook: RBA, RBNZ & NFP in focus

October 02, 2021 18:54

The final quarter of 2021 kicks off with some major economic news announcements. This includes Monday’s OPEC meeting, Tuesday’s Reserve Bank of Australia (RBA) Rate Statement, Wednesday’s Reserve Bank of New Zealand (RBNZ) Rate Statement and Friday’s US Non-Farm Payroll figures.  

The RBA and RBNZ news could set the trend for the rest of the year, especially because both central banks bailed on increasing interest rates recently – even though the market had been expecting an interest rate hike this year.  

Larger institutions are also likely to start positioning themselves in global equities in the run-up to year-end. Therefore, traders will be analysing market flows to see if the stock market sell-off will continue or if a turnaround is more likely.  

You can learn more about some of the global themes affecting the markets in this selection of new education articles.  

Weekly Forex Calendar 

Source: Forex Calendar from the MetaTrader 5 trading platform provided by Admirals.  

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Trader’s Radar – RBNZ Rate Statement 

On Wednesday 6 October at 2 am BST the Reserve Bank of New Zealand will release its latest interest rate decision. It is widely expected the bank will increase interest rates a quarter basis points from 0.25% to 0.50%.  

The interest rate hike was also expected in the last meeting but the bank held back due to the country going back into lockdown in August because of a delta variant outbreak. At that meeting, central bank members reiterated that monetary tightening is still the focus of the bank.  

However, with most of this expectation already priced in, it’s likely that only a very aggressive rate hike comment will help to lift the New Zealand dollar, especially because the US dollar is looking more positive.  

Source: Admirals MetaTrader 5, NZDUSD, Monthly - Data range: from 1 Aug 2013 to 2 Oct 2021, performed on 2 Oct 2021 at 7:00 pm GMT. Please note: Past performance is not a reliable indicator of future results.  

The monthly price chart of NZDUSD shown above highlights a long-term range that has developed in between the two black horizontal support and resistance levels from 0.7513 and 0.6248.  

Currently, the price is sitting in the middle of the range and at a level of intermediate support around 0.6900, shown by the middle black horizontal line. If the price breaks through this level, traders may eye the next major support line at 0.6248. However, if the price holds above the level, then traders may eye next major resistance line at 0.7513.  

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Corporate Trading Updates and Stock Indices 

Global stock market indices have continued to sell-off in line with the typical seasonal weakness over September. The declines in US stock market indices have been more noticeable as corrective patterns due to the long-term uptrend beforehand.  

European and Asia indices have remained range and, in most cases, stuck in between horizontal support and resistance lines. Traders will now be looking for any positive signs in US stock market indices to drive global risk sentiment higher.  

Source: Admirals MetaTrader 5, SP500, Daily - Data range: from 31 Dec 2020 to 2 Oct 2021, performed on 2 Oct 2021 at 6:30 pm GMT. Please note: Past performance is not a reliable indicator of future results.  

Past five-year performance of the S&P 500:  

  • 2020 = +16.17% 
  • 2019 = +29.09% 
  • 2018 = -5.96%
  • 2017 = +19.08%
  • 2016 = +8.80 

Historically, the S&P 500 stock market index has been turning higher around the 50-day exponential moving average (shown by the red line in the chart above). However, after several bounced from this moving average, price most recently broke through and has now acted as a level of resistance helping the index to move lower.  

But now the price has stalled on the 100-day exponential moving average (green line) and is now hovering in between these two major moving averages. Traders will be looking for price action or clues in cycle structure on whether buyers are more likely to turn up at the 100 EMA, or whether the price breaks through and continues to move lower in a deeper stock market correction.  

Either way, it is setting up to be a very interesting week! 

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Jitanchandra Solanki
Jitanchandra Solanki Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.