- Follow by yesterday’s RBNZ statement that we saw large drop of EUR/NZD and all NZD pairs, however, the move was most likely a sentimental move without any fundamental bias. Yes RBNZ stated that no rate hike in 2 years, and also that intervention and possible risk from U.S and geopolitical relations are all true, but in comparison to EUR, JPY and other weak currencies, NZD still has stronger fundamental datas, sentential stableness especially in comparison to USA & EURO. We’re looking to LONG NZD/USD or short EUR/NZD with this strategy.
- The catalyst was the NZD press conference of RBNZ trying to talk down NZD.
- We’re in a large oversold area for NZD.
- The risk of course is the strength into USD, so we think EUR will be a much better choice as fundamental bias is more in line with EUR/NZD.
- I’ll let the trade run on i’s on and since we’re testing this and entered a bit late, we will cancel the trade if we reach the target of 1.47 but count it as a further win for our record.
- yes i put in the pending order here
I chose to enter NZD/USD because i’m currently long USD/JPY & USD/CHF so i think this will be a good hedge as i’m holding USD trade over the weekend!!!
****updated Feb 13th 2am****
We’re slightly above the handle 0.7200 now, the current risk on sentiment has helped NZD but over the weekend we did have positive outcome for Trump and Abe meeting and USD had been recovered well for now.
However, there are still more uncertainty for USD than NZD and unless we have a strong risk off sentiment for days, NZD might be bottomed out which means we only need a negative USD for this week to see NZD/USD hitting 0.73.
In another word, there are no risk events for NZD this week to drag it down but there are many USD risk events and political events to push it either ways.
****Feb 15th 1am****
because of the strong sentiment in USD today especially from FED chair Yellen, March rate hike is now very possible. This is a new fundamental update that has a structural effect for USD, and because of that we’re most likely going to get hurt in this trade. I have less conviction for NZD over USD now but still will hold it as USD still has negative sentiment from uncertainty time to time, and I do expect some selling to USD before we reach March.
So now i’m aiming to exit at BE.
****Feb 17th 1am****
This week’s testifies from Janet Yellen plus the consecutive positive datas of US have now changed the fundamental structure of this trade.
Trump’s soft stance in front of Japan Abe, China Xi and Canada Trudeau also completely changed the previous negative sentiment of dollar.
We now have a very strong fundamental & sentimental reason to long and price in USD for possible rate hike in March and May as reflected already in the futures market.
Meanwhile, NZD did not follow up with more positive fundamental news to create divergence with RBNZ, on the contrary, the recent fundamental datas especially the retail sales and manufacturing index had been disappointed.
Therefore, i don’t have any more fundamental reason to hold this trade as i’m bullish in USD more than NZD and any other currencies for now.