JPY weakens against Asia-Pacific currencies in the morning Asian session as strong economic data around the world diminishes the appeal of the Japanese currency as a safe-haven asset. Global manufacturing data were better than expected in July, CMC Markets says, adding the dollar strengthened as market participants took profit on long euro positions against the greenback. USD/JPY rises 0.2% to 106.16, AUD/JPY is up 0.1% at 75.58 and NZD/JPY gains 0.1% to 70.15, while EUR/USD is down 0.1% at 1.1757.
The AUD/USD continues to hover near an 18-month high of 0.7200, and Commonwealth Bank of Australia thinks it can remain elevated because of ongoing weakness in the U.S. dollar. Today’s RBA policy statement at 2.30pm local time kicks off a busy week of communications from Australia’s central bank, but CBA doesn’t think any messaging will move the Aussie materially.
👉 Australia’s central bank is expected to keep its key interest rate unchanged at 0.25% today.
👉 The US dollar strengthens slightly against the euro and yen and the WSJ Dollar Index gains 0.2%. The ISM manufacturing report comes in better than expected, although Cambridge Global Payments worries about employment data in that report, which showed manufacturing jobs are still being lost. The U.S. dollar managed to keep its strength, with the ICE U.S. Dollar Index edging higher to 93.51.
👉 Spot gold price added $2.00 to $1,976 an ounce, and spot silver price edged lower to $24.32 an ounce. U.S. WTI crude oil futures (September) rose 1.8% to $41.01 a barrel.
👉 The Reserve Bank of New Zealand is likely to increase its planned government-bond purchases to NZ$90 billion from NZ$60 billion when it makes its policy statement on Aug. 12 and lengthen the timeframe to 18 months from 12 months, ANZ says.
👉 Widespread working from home during the Covid-19 pandemic has transformed daily routines for employees, managers and companies. Researchers at Harvard Business School and New York University estimate homebound workers have on average extended their workdays by 49 minutes, an 8.2% increase, tied in part to people sending more emails after business hours. That’s based on analysis of emails and meeting data sent in 16 large metropolitan areas, including in the US and Europe. The question of what working from home means for productivity, innovation and commercial strategies is a big one as companies get more accustomed to a world remade by the virus. Companies also held more meetings using digital tools, with more people attending them, but decreased the length of those sessions during the pandemic, the researchers find.
As we have observed earlier in the Currency Monitoring Chart, we discovered that NZD/JPY lines are separated with the farthest distance.
The following is NZD/JPY looking at the Daily chart:
INTRADAY MARKET INSIGHTS
Bullish bias above 105.75. The pair has entered a consolidation phase since marking a high of 106.47 yesterday. Currently it has returned to levels above both 20-period and 50-period moving average. The intraday bias remains bullish, and the pair should revisit 106.20 and 106.45 on the upside. Key support is located at 105.75.
Bias remains bullish. The pair remains on the upside after rebounding from a low of 1.1694 yesterday. The 20-period moving average has just crossed above the 50-period one, keeping the intraday bias as bullish. Unless the key support at 1.1735 is breached, the pair should return to 1.1780 and 1.1805 on the upside.
Caution. The pair is challenging the key support at 0.7100 (around the lower Bollinger band) and therefore caution is advised. Unless this key support is breached, the pair should target 0.7130 on the upside (around the upper Bollinger band). Alternatively, a break below 0.7100 would open a path toward 0.7075 on the downside.
Rebound expected. The pair posted a rebound and crossed above the 20-period moving average. The relative strength index is around its neutrality level at 50, suggesting the lack of downward momentum for the prices. Hence, as long as 0.6587 is not broken, expect a bounce to 0.6647 and even to 0.6662 in extension. Alternatively, a break below 0.6587 would bring a drop to 0.6561 as a target.
Bullish above 1.3040. The pair stays on the upside after rebounding from a low of 1.3003 yesterday. It has returned to levels above the 20-period moving average, which has just crossed above the 50-period one. A further rebound should bring the pair toward 1.3105 and 1.3140 on the upside. Alternatively, a break below key support at 1.3040 would trigger a further decline toward 1.3005 on the downside.
Under pressure. The pair retreated from 0.9240 and struck to the lower Bollinger band. Besides, the 20-period moving average is turning downward. Hence, unless the resistance level at 0.9200 is violated, the pair should reach 0.9160 and 0.9140 on the downside. On the other hand, crossing above 0.9200 would trigger a technical rebound to 0.9220 as a target.
Downside prevails. The pair retreated from 1.3450 and returned the level below both 20-period and 50-period moving averages. In addition, the bearish cross between 20-period and 50-period moving averages has been identified. Therefore, as long as the resistance level at 1.3420 holds on the upside, intraday negative bias remains with down targets at 1.3370 and 1.3350 in extension. On the other hand, a break above 1.3420 would call for a re-visit of 1.3450.
Bullish bias remains. The pair is trading above the key support level at 124.24, helping to maintain the bullish bias. The relative strength index stays around its neutrality level at 50, suggesting the lack of downward momentum for the prices. To sum up, as long as the support level at 124.24 is not broken, expect a rebound to 125.13 before targeting to 125.34 in extension. In an alternative scenario, a break below 124.24 would open a path to 123.88 on the downside.
Key resistance level at 0.9023. The pair is holding on the downside and is under pressure below the key resistance level at 0.9023, which should limit the upside potential. Even though a continuation of technical rebound cannot be ruled out, its extent should be limited. Hence, below 0.9023, expect a drop to 0.8959 and even to 0.8944 in extension. Alternatively, a break above 0.9023 would trigger a rebound with 0.9049 as a target.