Global inflation updates and Fed talk were the main drivers this week, with a few high-level country-specific economic events creating opportunities as well, including Australian jobs data and the US CPI.
Out of six discussions, Only two scenario/price forecasts saw both financial and technical arguments raised To become a potential candidate for a risk management overlay. Check out our review of that discussion to find out what happened!
Watchlists are price predictions and strategy discussions supported by fundamental and technical analysis, and are a crucial step towards creating an account High quality discretionary business idea Before working on a risk management and trading plan.
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NZD/USD for 2 hours Chart by TradingView
On Tuesday, our strategists' attention was focused on the upcoming US CPI update, arguably the most anticipated event of the week and perhaps the biggest driver of volatility in the broad markets.
If inflation data comes in net of strong/reduced Fed rate cut prospects, our strategy has been to focus on an upside range setting for USD/CAD. Should the US CPI event fail to impress dollar bulls (as markets expected), a symmetrical triangle setup for NZD/USD was the best option for our strategists.
It seems that the US CPI data update failed to impress the US dollar bulls as the headline reading came in lower than the previous one in both the annual and monthly readings, along with the core CPI component falling as well.
This was a legitimate fundamental catalyst for our long NZD/USD bias, and with the market already breaking out and trading sustainably above the symmetrical triangle pattern, the odds favored more NZD/USD bulls, especially with the broad market risk sentiment already leaning generally positive. .
Given that both fundamental and technical catalysts have moved in line with the bullish bias for NZD/USD and it has never traded below its pre-event price, the odds are “very likely” that this discussion will be supportive of net positive outcomes without the need for a process. Very complicated. Risk management strategy/implementation.
AUD/NZD 30 Minute Forex Chart by TradingView
On Wednesday, our strategists turned their focus to the upcoming Australian employment situation update, a potential catalyst for higher volatility conditions in the Australian dollar going forward.
Based on our analysis in the Event Guide to Australian Jobs, the odds were that the net outcome was more likely to be negative than positive, as indicated by recent business survey data.
For the weak Australian jobs update, our focus will shift to the AUD/NZD, but if the data is surprisingly strong, an upside in AUD/CHF would make sense in this scenario.
the Australian jobs were mixed, but the market viewed them as net weak Due to the large jump in the unemployment rate from 3.9% to 4.1%, the March unemployment rate was revised up to 3.9% from 3.8%, net of a loss in full-time jobs (the main net job gains were all part-time).
This result triggered a fundamental bearish bias on the AUD/NZD, and with the market trading sustainably below the strong support zone between 1.0950 – 1.0960, the odds favored another bearish move.
Given that both fundamentals and technical factors were consistent with a sell bias, the price was trading well below its pre-event lows at Friday's close, and the move to the downside was relatively flat, odds are that this discussion was “most likely” supportive of a net positive . Results without the need for a very complex risk management strategy/implementation.
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