US markets continued the mixed bag theme as of late, as the Trump took the leader as the republican front runner and candidates started to speak out. However, the real story was the unemployment data which disappointed the market as unemployment claims came in at 278K (271K exp). This was also further exacerbated by core durable goods orders m/m which came in at 1.7%, slipping slightly lower than the previous months 1.8%. For many though the inevitable still seems like a reality and most people are still expecting that the Federal Reserve will still look to lift rates again in 2016, albeit at the end of the year from the most recent data coming out of financial markets.
Despite all of this on the charts the S&P 500 continues to go from strength to strength and the recent bullish movements on the charts have been positive and today saw the market close above resistance at 1985, which could signal a rise into the high 2000 mark again. The next level of resistance is at 2035 and the market will likely look to test this key level in the coming week if US data continues to be positive for equity markets. The main focus however will be 2132 which has been the market ceiling for some time and something that many traders will be looking to see if they can push on in the coming months despite the recent global weakness.
The kiwi dollar has continued to fight back up the charts despite the obvious weakness in the economy and the likely cut from the Reserve Bank of New Zealand (RBNZ). So far the USD weakness has helped drive the NZD higher and fixed interest traders are enjoying the moment while it lasts as the likely cut will drive the market elsewhere. The focus though will for the rest of the week will be retail sales from Australia which is likely to play on the NZDUSD as AUD correlation continues to be quite strong between the two commodity currencies.
For the NZDUSD though the technical patterns have been very strong as of late and the recent upward wick has been smaller than normal as a downward bearish trend line has been in play. For many a lower high is never a good sign and something that the bears will look to take advantage of. The major pattern though is the converging bullish trend line which is forming a pennant pattern on the charts, and this looks likely to cause a lot of stress on the NZDUSD and people as a result will be looking for a breakout lower on the charts. For me the key level still remains at 0.6556, as the market is still focused on the bearish downside risks associated with the New Zealand economy.
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