This week’s key macro events are mostly out of the way. However, we still have important data coming from the Antipodean nations in the early hours of Thursday and from Canada on Friday. So, the focus is now going to turn to the commodity currencies.
New Zealand will kick off the data releases with the publication of quarterly CPI this evening. Inflation is expected to have risen by 0.4% in the first three months of the year after climbing 0.1% in the last quarter of 2017.
From Australia, we will have key employment figures to look forward to a few hours later. Aussie employment is expected to have risen by 20,300 in March after climbing by 17,500 the month before.
Finally, Canadian data will include CPI and retail sales on Friday, with both expected to have risen by 0.4% each month-over-month.
Naturally, the focus in early Asian session will be on the AUD/NZD pair. This cross has actually shown some bullish characteristics in recent days, despite being stuck in a strong downtrend since October. Last week, for example, it managed to hold its own above the long-term bullish trend line, around the 1.0500 handle. And today, it has broken above resistance at 1.0600, taking out a short term bearish trend line in the process.
The short-term path of least resistance is now to the upside. But a lot will now depend on the fundamentals and Thursday’s key data releases from both New Zealand and Australia. If after the data releases the AUD/NZD still finds itself above the short-term support level at 1.0600 then this would mean that the bullish remained intact. If it goes and holds below this level a return to long-term support at 1.0500 should not be ruled out. Meanwhile the next levels of resistance come in at 1.0650 followed by 1.0710.
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