Chart of The Day NZDJPY

NZDJPY Potential Reversal Zone & Probable Price Path

NZD: The global risk aversion atmosphere has cooled, and the chances of the Central Bank of New Zealand to cut interest rates have declined, which is positive for the New Zealand dollar. A large real estate agent in Auckland said that Auckland home sales in November were the second highest in history, with average prices rising 9.6% year-on-year. New Zealand's terms of trade fell 4.7% in the third quarter. The average auction price of New Zealand whole milk powder was US$3,182 per ton, 4.8% higher than the auction two weeks ago. New Zealand Finance Minister Robertson says will introduce legislation that will place a new tax on those that earn over NZD 180K.This morning RBNZ Governor Orr flagging risks to the economic recovery and outlook, while reiterating that the LSAP, FLP and OCR can all be adjusted to meet the Bank’s mandate.

JPY: Japan factory output rose for fifth month; retail sales rebounded: Industrial production rose for the fifth straight month by 3.8% MOM in October (Sep: +3.9%), translating to smaller annual fall of -3.2% YOY (Sep: -9%). The steady pace in factory output growth despite rising Covid-19 cases offered assurance that economic recovery had managed to carry on. Retail sales rose 0.4% MOM in October (Sep: -0.1%), pushing the YOY change to 6.4% growth (Sep: -8.7%). This was driven by sales at department stores and supermarkets as sales at convenience stores continued to fall. This morning BoJ Deputy Governor Amamiya reiterated the BoJ will not hesitate to take additional easing steps as required and will extend the duration of COVID response measures past the March deadline as needed with an eye on the pandemic impact to the economy.

From a technical and trading perspective, NZDJPY appears to be completing an impulsive advance from the summer/autumn consolidation phase, as 7400 caps this initial advance there is an opportunity for counter trend players to deploy short exposure on a breach of interim trend channel support at 7330, through here bears can anticipate a three wave correction to develop to retest the prior range resistance at 7200 as support setting up a potential wave 5 advance to challenge offers and stops above 7450

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