* Now well into the shortened trading week where we get another one of those packed data release schedules. This time, we get a week’s worth of US tier 1 data crammed into only three days which could have some interesting implications for thin markets. We see Q3 GDP, Core Durable Goods, Personal Spending and Unemployment Claims all in rapid succession. Consensus seems to be that USD directional flows are set in stone and that this stretch of data isn’t as important as it might have been last month.
* Sticking with the relatively high US Dollar theme, there will at least be one person cheering on the bulls and that’s Mario Draghi of the ECB. A stronger dollar will help weaken the Euro and ease the pressure on the central bank to continue easing into uncharted, negative territory. Emerging economies with high levels of USD denominated debt on the other hand wont be overly thrilled and opens up a whole different can of worms.
* What about commodity prices? The Australian economy is of course feeling the pain, but it’s still emerging economies who will be hit the most by the combination of the two. The Oil price has gotten a lot of attention lately, but throw Gold and Silver into the mix too who will be sure to continue feeling the pain of traditional USD up, Gold/Silver down flows.
* With all the possible negative implications of an overly strong US Dollar both domestically in the US and abroad, I think we’re going to see a few more tactically timed roller-coaster comments from Fed speakers in the new year. Fasten your seatbelts, the first hike was only the start of the ride. The Loop is coming!
On the Calendar Tuesday:
GBP Public Sector Net Borrowing
USD Final GDP q/q
USD Existing Home Sales
Chart of the Day:
Another Kiwi chart today and another one that doesn’t get looked at all that often in NZD/JPY.
The daily shows the level that we are watching clearly, with plenty of touches to keep us interested as price starts to coil toward a possible breakout. Is this a huge ascending triangle ready to pop to the upside or are you looking at it from the point of fading major resistance?
As you can see from the pip counter inside MT4, with Christmas week slow trading looking to have well and truly set in for us now, there’s not much use in expecting a 200 pip breakout from here. Keep the pair and the chart on your watch list and we’ll re-visit this one in the new year.
Have you got NZD/JPY on your Forex trading watch list?
Dane Williams – @VantageFX
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