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Yen Mildly Firmer in Subdued Trading, Kiwi Soft Despite Strong Retail Sales

The forex markets are rather quiet in Asian session today. With some European markets and Canada on holiday, trading will likely remain subdued for the day ahead. Yen is trading mildly firmer, as near term consolidations are extending. Meanwhile, Australian Dollar and Canadian Dollar are the slightly softer ones.

Technically, Canadian Dollar might be a focus in the next few days. Last week’s retreat in the Loonie lost momentum rather quickly, while oil price appears to have stabilized above 62 handle. EUR/CAD could try for another take on 1.4580 temporary low and break there will resume larger down trend. But that might also depend on whether USD/CAD could draw enough support from 1.2061 key long term level to stage a bullish reversal.

In Asia, at the time of writing, Nikkei is up 0.26%. Hong Kong HSI is down -0.41%. China Shanghai SSE is up 0.16%. Singapore Strait Times is up 0.36%. Japan 10-year JGB yield is up 0.0010 at 0.084.

New Zealand retail sales rose 2.5% qoq in Q1

New Zealand retail sales rose 2.5% qoq in Q1, much better than expectation of -1.8% qoq. 10 of the 16 regions showed higher sales values. Ex-auto sales rose 3.2% qoq, also well above expectation of -1.0% qoq.

Electrical and electronic goods had the largest increase, up 8.4 percent followed by recreational goods, up 16 percent in the March 2021 quarter.

“Higher spending in the electrical industry coincides with falling prices for computers and phones during the first quarter of 2021,” retail business manager Sue Chapman said.

NZD/JPY and NZD/USD soften but stay above near term support

New Zealand Dollar weakens mildly today despite much stronger than expected retail sales data. While RBNZ rate decision is a focus this week, it’s unlikely to provide any market moving surprises. Kiwi is currently just following broad market developments.

NZD/JPY edged higher to 79.40 earlier this month, but quickly retreated. There is no confirmation of bearish reversal yet. But upside momentum was clearly diminishing as seen in both 4 hour and daily MACD. Sustained break of 77.68 support will also have 55 day EMA firmly taken out. That would argue that NZD/JPY is already in correction to, at least, the rise from 68.86. Deeper decline could be seen back to 75.61 support and possibly below. Nevertheless, rebound from current level would retail near term bullishness for another high above 79.40 first.