- we have seen some notable strength into NZD recently and this is justified as NZD did have a good fundamental datas to begin with. Unlike AUD, NZD has been recovered well since 2017 and the market even got ahead of itself to price in for rate hike weeks ago - only to be jawboning down by RBNZ. Now even though the rate hike is not going to come by RBNZ in next 24 months, the rate cut is also removed from the table and as long as the inflation picks up, NZD actually has higher chance for rate hike because the already high yield and economic picture. Meanwhile, we also have 3 technical signal for the 3 pairs. AUD/NZD & NZD/USD had fresh big shadow today, and both pairs have the fundamental bias. The AUD/NZD reached a technical high and is due for a retracement while the fundamental side does not support such high price of AUD over NZD either. NZD/USD was also in a nice support area above 200EMA and the yield spared is still favouring for NZD plus the political stableness of the country. NZD/CAD on the other hand had signal days ago of big shadow and kangaroo tail, at that time the NZD negative sentiment was still very strong while CAD just had a good labour market data to support the sentiment. However, now the negative sentiment of RBNZ had faded out while the disappointed retail sales figures and the large consecutive built in Crude Oil Inventory continued to pressure CAD. CAD is still resilient when versus weaker currencies, but when versus NZD we do think NZD as a higher yield currency and better fundamental picture should outperform CAD once the RBNZ jawboning effect had faded.
- The catalyst was the sentiment and things are revert back to the fundamentals now.
- We’re oversold for NZD in all 3 pairs.
- The risk is another jawboning for RBNZ or very negative datas from NZD. The high yield should support NZD for any sudden event providing we’re buying at a low support zone.
- I’ll manage it fundamentally with the actual datas.
- Yes the fundamental bias is clear in all 3 pairs for now and we will readjust it if the underlying fundamentals have changed.
SL @ 1.0775
P @ 1.0527
SL @ 0.7117
P @ 0.7397
SL @ 0.9276
P @ 0.9608
****update Feb 24th 5pm****
we’ve got filled in AUD/NZD and the day closed with an indecisive candlestick.
Fundamentally NZD still has better datas than AUD but the GDP next week might give AUD good boost.
Meanwhile, we will see how the commodity prices perform next week and if we resume to the upside, then AUD/NZD will be in trouble.
NZD/USD did not get filled but we still like the double bottom pattern above this 200 EMA and fundamentally still think NZD is doing well with the high yield and political stableness.
We cancelled our previous entry but initialled another entry with better price point
sl @ 0.7035
p @ 0.7315
NZD/CAD also got filled but because of the positive data of CAD, this trade now has less fundamental bias then before.
However, NZD is still fundamentally strong because of the high yield, the rate hike possibility and the political stableness and less effected by oil price.
Technically this is still a great support zone to enter with our SL below 200 EMA, we think the upside movement is still likely to come.
****updated Feb 28th 9pm****
NZD/CAD reached our target today because of the significant CAD weakness.
AUD released the new GDP figures q/q and y/y and both figures came out as positive deviation; we saw strong strength into AUD and our trade is in a drawdown now.
I still think NZD should hold well in this trade as we’re already in a very hight position with equal economic strength in both AUD & NZD.
Fundamentally AUD has GDP q/q at 1.1% and y/y at 2.4% while NZD has GDP q/q at 1.1% and y/y at 3.5% which is still higher than AUD.
Also the inflation and employment figure of NZD was still not bad.
Therefore, we’re holing this trade for now, but the conviction is less than before.
NZD/USD also got filled at nice level and we’re holding it now as we might still have some dollar weakness coming of the days due to political unstableness, and NZD still has higher yield.
****updated March 2nd 7pm****
AUD/NZD trade survived the strong resistance of 0.75 and because of the AUD weakness, we’re now heading lower.
This trade also did not get in at a nice handle.
NZD/USD almost got stopped out now, this was a much better trade regardless if we get stopped out. The reason is because we got in a proper level and prior March 1st Donald Trump and Fed members’ comment, NZD was having much stronger strength than USD but that suddenly changed due to the new catalyst of Feds and Donald.
These new catalyst was not predictable so we have followed our plan, got in at good level with proper SL below 200 EMA but still lose, that’s fine. That’s a good loss.
****updated March 3rd****
NZD/USD got stopped out.