Weekly Market Outlook: BOC, RBNZ in focus

Juli 12, 2021 11:00

All eyes turn to the Bank of Canada (BOC) Rate Statement and press conference on Wednesday 14 July. The Canadian dollar was one of the best performing currencies in the first half of the year but has since struggled to gain any momentum after the central bank announced a reduction of its quantitative easing.

Before the BOC, the Reserve Bank of New Zealand (RBNZ) releases its latest rate statement report. The New Zealand dollar (NZD) has been a currency in focus as the central bank announced a sudden shift in possible interest rate hikes a few weeks ago causing a temporary push higher in NZD.

There are also other major economic news announcements due for release, including US CPI figures on Tuesday, AUD employment numbers on Thursday, and US retail sales on Friday.

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 MetaTrader 5 trading platform provided by Admirals

 

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Trader’s Radar – RBNZ Rate Statement

The Reserve Bank of New Zealand (RBNZ) shocked the markets a few weeks back when they suddenly announced a shift in interest rate policy. NZDUSD rallied nearly 150 pips in the aftermath, before giving back all of its gains.

This highlights just how important central bank interest rate decisions are to the market right now. Traders will be looking for any clues on when the next interest rate hike is likely to be – later this year or next year?

It’s likely the bank will keep interest rates on hold for now, but the market has already brought forward its expectations of a hike later this year from 2022. This could cause some strength in the New Zealand dollar but there are risks if other central banks change interest rate policy as well.

Source: Admirals MetaTrader 5, NZDUSD, Monthly - Data range: from Sep 1, 2013, to Jul 11, 2021. Performed on Jul 11, 2021, at 7:00 am GMT. Please note: Past performance is not a reliable indicator of future results.

 

In the long-term, monthly price chart of the NZDUSD currency pair, it’s clear to see the current support that is holding price. The lower black horizontal line provide to act as a resistance level in 2019, now that it has broken through it is acting as a support level around 0.6970.

If the buyers can stay above this support level, then there could be some further upside back to the previous swing high and historic resistance around 0.7460 to 0.7560.  

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Corporate Trading Updates and Stock Indices

US global stock market indices continue to lead the way, with European and Asia indices lagging. However, most of the flows in US stock markets is finding its way into the tech sector.

The FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) have been leading the Nasdaq 100 and S&P 500 index higher. Although Netflix could be replaced with Nvidia which is a stock on fire.

Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from Oct 15, 2020, to Jul 11, 2021, performed on Jul 11, 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

 

The S&P 500 index shown above, still confirms the overall uptrend in the market. The exponential moving averages (20, 50 and 100-periods) are still moving higher confirming the trend.

Buyers have been using these moving averages as levels to initiate new positions with the past few impulse cycles coming off the 50-period (red) exponential moving average.

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