Will we see more volatility during the London session?
Here are the headlines that you missed in the last couple of hours:
- Fast take: U.S. consumer inflation muted, just don’t buy a used car
- Labour calls for ‘circuit breaker’ lockdown as UK’s daily death toll rises
- Eli Lilly Covid-19 antibody treatment trial is paused due to ‘potential safety concern’
- G20 to extend debt freeze for poorest nations, still wrangling over next steps
- Federal budget, outbreak containment, and RBA rate cut speculations push consumer sentiment index 32% higher to its highest levels since July 2018
- Negative rates ‘not a game of bluff’, says Reserve Bank of New Zealand official
- Australian dollar near 1-week lows, New Zealand dollar ticks up
Upcoming Potential Catalysts on the Economic Calendar:
- Eurozone’s industrial production at 9:00 am GMT
- U.S. PPI reports at 12:30 pm GMT
What to Watch: GBP/NZD
GBP/NZD just broke below an ascending triangle after traders shrugged off negative interest rate speculations from the Reserve Bank of New Zealand (RBNZ) in favor of pricing in potential lockdown measures in the U.K.Can the pair extend its downswing? Take note that the pound is sitting on the 1.9400 major psychological handle. What’s more, GBP/NZD has already fallen by 57 pips today. That’s around 35% of its 168-pip average daily volatility!
If you think that (1) a lack of progress on the Brexit negotiations and (2) continued speculations of increased lockdown measures in the U.K. will further weigh on Sterling, then you can short at current levels and then bail at the first signs of support or bullish pressure.
If you believe that the pair is already oversold, or that 1.9400 will hold as support, then you can also wait for a couple of bullish candlesticks and then aim for a potential retest of the broken triangle support.