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This week only one central bank announces rates, the RBNZ is expected to leave interest rates the same despite the outlook looking weak with lower wage growth and weaker employment. It is expected that the RBNZ will revise their economic outlook and push their plans to hike rates to 2020. This will be seen negatively by the market, but this is also becoming a growing trend with the central banks as global economic risks continue to grow.
GBP sees Q4 GDP announcements which is forecast to be lower than previous as Brexit continues to be of risk to the consumer, although we have seen wage growth and employment grow in the UK of recent. A better than expected number here could give the GBP bulls opportunity to target the 1.3100 resistance again.
Seasonally the USD comes into a strong period and with key data of recent helping the greenback along with its seasonal path, we expect this to continue. Producer Price Index is expected to rise this week and being a leading indicator of consumer price inflation, we can assume if this number is strong the USD will gain significantly.
DXY finished strong last week after re-testing the $95.00 demand zone the week prior. If price can re-test the $96.00 support level and produce bullish price action expect further upside here for the USD.
We may see some short-term strength from the AUDUSD this week as we have a minor resistance level sitting at 0.7150. If price prints bearish price action here, look for further downside into the key demand zone of 0.7050. Price could move lower early in the week and close below 0.7050 will bring some fresh sellers into the market.
Similarly, to AUDUSD, NZDUSD sits just above a key demand zone. With the weekly candle closing so bearish we should expect some retracement before a continuation here. If price closes below the demand zone around 0.6700 expect sellers to drive the market lower.
NZDCAD will be the chart to watch this week. With the RBNZ expected to push rate hikes back and CAD employment figures giving the BoC reason to continue their plans to hike rates, this market looks likely to take out the current support level of 0.8900. If we do see a definitive close below this level we can expect the market to continue to find lower prices.