We’ve had a pretty chill trading day so far but volatility may pick up in the next trading sessions with the U.K.’s labour market data release!
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Japan, Chinese, and Hong Kong markets out on bank holiday
In a speech on Monday, RBNZ Gov. Orr said that New Zealand’s high inflation (currently 4.7%) is “why we’ve retained a restrictive monetary policy stance.” Deputy Gov. Hawkesby also shared that consumers remain in a good position to allow for higher interest rates.
U.S. crude oil prices trade around $76.00 after Israel said it had “concluded” a series of strikes in southern Gaza and eased supply concerns
Price Action News
There were no major headlines during the Asian and early European session trading but that didn’t stop NZD bears from partying in the pip streets!
NZD was one of the most volatile major currencies as it lost pips against its major counterparts. That’s despite RBNZ Governor Orr and his Deputy Hawkesby shared hawkish sentiments before a parliamentary committee earlier today!
One possible reason for NZD’s weakness is traders taking profits from Friday’s strong gains though the commodity-related currency may also be taking hits from traders taking out their “risky” bets ahead of this week’s potential catalysts. New Zealand will also be dropping fresh quarterly inflation expectations data, which may reflect lower inflation estimates and put a dent on the RBNZ’s hawkish biases.
In any case, NZD is trading in the red across the board with the most losses seen against JPY, CAD, and CHF and the least losses logged against EUR, AUD, and USD.
Upcoming Potential Catalysts on the Economic Calendar:
FOMC member Michelle Bowman to give a speech at 2:20 pm GMTFOMC member Thomas Barkin to give a speech at 5:00 pm GMTBOE Gov. Bailey to give a speech at 6:00 pm GMTAU Westpac consumer confidence data at 11:30 pm GMTJapan’s PPI at 11:50 pm GMTAU NAB business confidence at 12:30 am GMT (Feb 13)New Zealand’s quarterly inflation expectations at 2:00 am GMT (Feb 13)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
Kicking off this week’s top-tier data releases is the U.K. and its latest labour market data. Word around is that we’ll see a higher unemployment rate but also lower full-time employment and slower wage growth.
We know that Bank of England (BOE) members pay close attention to wage trends so you can bet that GBP traders will be too.
Slower wage growth could qualify as “more evidence” of falling inflation for the BOE and probably convince more members to vote for an interest rate cut in the foreseeable future.
The U.K. won’t print its report until tomorrow’s London session, however, which means GBP/USD could still trade on technicals and see some gains.
Look out for a possible bounce to the 1.2640 area of interest near the R1 (1.2650) Pivot Point and previous resistance. Bearish candlesticks around the technical ceiling could draw in sellers who are looking for a better price to short GBP/USD ahead of the U.K.’s event.
But if GBP/USD fails to attract demand around the trend line support, then you should also be ready to take advantage of a potential bearish breakout.
GBP/USD, which is finding support from the 1.2620 Pivot Point line and trend line support, could trade below the support zone and revisit previous areas of interest like the 1.2600 psychological handle and the S2 (1.2580) Pivot Point line.
Watch GBP/USD’s reaction to its current levels to see if you should start making trading plans for a trend line bounce or a breakout!