- USD continued to be in a negative sentiment regardless of the bullish fundamental. Last week’s miss on GDP had only pushed it further, and today the disappointed BOJ stimulus package has caused large buying in JPY which further pushed USD down. Of course that USD is still strong fundamentally, however, the current sentiment favours more in EUR especially if today and Thursday’s UK rate decision is a cut, it will push GBP lower and cause EUR a buy.
- There are few catalyst that might help this trade; first are the negative UK service PMI data and rate cut; second are the US data for the rest of the week including manufacturing PMI, unemployment claims and NFP. Of course, it also works in other way that if UK datas are positive + USD datas are positive, then we will be in a very bad position for this trade.
- We are still in a very low range of the daily chart and just crossed above 200EMA today with a strong candle, so we think there is still room to go for upside.
- The risk as mentioned, are the positive data from UK & USD for the following days which we will exit this trade.
- I’ll mange with the news data and also if any positive sentiment coming for USD
- This will be a good trade into the news data but of course the risk is always 50/50 as we do not know the result of the economic datas for certainty.
SL @ 1.1054
- BOJ stimulus package came out today and was in line as expected which was highly disappointed for the market. Japan continues to suffer deflation and unless they can have a clear solution to deal with it, a small stimulus package is just not going to stop people buying JPY as JPY has a natural status of safe heaven; so regardless of the negative rate, traders are always in favour of buying JPY if all things are equal. USD on the other hand is still in a negative sentiment, regardless of the fundamental strength, the FED continued to come out and emphasis how rate hike is not their priority and they’re in no rush to hike.
- The catalyst was the BOJ stimulus package, and now there are few more catalyst for this week that might help this trade: If the BOE cut rate, it might caused short-term volatilities and money rushes into safe heaven currency. Then, if USD datas for this week are a miss including PMI and NFP, then we will see continuous weakness in USD.
- we’re actually in an oversold territory and 100 handle is often rumoured to be the intervention position for BOJ. So if you want to choose shorting USD, I’ll go with EUR/USD instead. But if anything happens in the market for this week, the JPY pair will always have large movement.
- The risk is the positive sentiment for USD as if the datas for USD are positive for the following days, also if BOJ comes out with any new further stimulus talk - that will drive JPY down.
- I’ll manage it with sentiment play and mainly focus on BOJ comments and USD datas
- I will not short this trade personally because of the oversold territory and 100 handle, but it is still a valid trade.
SL @ 103.48
AUG 3RD -
The pair did not get filled so we cancelled the trade.
- RBA cut the rate today and also released a somehow dovish statement; next week we will have RBNZ rate decision and now the central bank of New Zealand and poll all predicted a cut. AUD & NZD has a tendency to follow each other in trades, currencies and economics. Both are commodities exporting countries and both are in the same geographic location. Today NZD’s neighbour had a cut, and it just added on more possibilities for NZD to cut also. If all things are equal, NZD still has higher yield than AUD, however, it also has less fundamental strength in comparison with AUD especially the commodities of iron ore is still very attractive and a buy for a long-term. The good thing bout this trade is that the risk is low in terms of sentiment as these 2 currencies tend to move together.
- We had a RBA rate cut and a higher GDT price for NZD, however, the AUD/NZD after went down initially, it closed high technically - it really signalled a strong strength for AUD and now the uncertainty lies with NZD. The catalys will be the rate decision from RBNZ next week and nothing further should drive AUD down in terms of datas in comparison with NZD.
- We’re in an oversold territory as AUD/NZD has been a downtrend but now seems to be in retrace or reverse as we hope.
- The risk is the rate hold decision next week from NZD or any signal for rate hold from NZD from now to next week.
- I’ll manage it with the news from NZD and decide whether we want to close our position as buying rumours and sell fact or keep holding until the rate decision comes out.
- yes this is a really low risk trade fundamentally as these 2 currencies have the same sentiment.
SL @ 1.0381
alternative pair to trade into the NZD catalyst is NZD/JPY
As mentioned, JPY is in a strength now because of the disappointment stimulus package from BOJ.
NZD is sill in a negative sentiment as market is highly anticipate a rate cut decision.
Technically we’re in between the range now but still have room to go downside.
As usual with all JPY pair, you will have a larger movement in this trade if you choose to do so.
Personally I’ll prefer AUD/NZD trade just because the risk is lower as the 2 currencies are in the same risk on sentiment category unlike NZD VS JPY.
SL @ 75.36
Aug 3rd -
Our AUD/NZD got filled at 1.0552 and now is at 1.0605.
The current sentiment for NZD is till very negative, in effect, it is the most selling currencies for today. On the other hand, AUD was not so good either as I mentioned, these 2 currencies tend to move together. However, since the uncertainty still lies with AUD more than NZD, we can expect to see some more movement upside until next week’s RBNZ rate decision.
We want to add @ 1.0637 with SL @ 1.0467
If you’re not both pair of AUD/NZD OR NZD/JPY, then alternative pair to short NZD will be NZD/USD as we have a technical entry today with large red candle.
If you choose to do so, you can SHORT NZD/USD
Aug 4th -
Lots of Volatility today from BOE rate cut decision and expansion of QE, however, nothing much really effect the pair of AUD/NZD.
We will have RBA Monetary Policy Statement later on which might cause some movement up/down but overall I’m still convicted to hold this pair and put my add on in place as NZD is still bearish until next week’s meeting, and AUD still strong especially if tomorrow’s NFP from USD is a disappointment.
Cancelled the trade as we ddi not get filled.
Same scenario and now i’m more convicted in the strength with JPY after the BOE decision, the global risk sentiment is off and I’ll expect NZD to drop further against with JPY.
I’ll put a pending ADD @ 71.31 with SL @ 74.01
Aug 8th -
we have a very good uptrend and 3rd green candle because of the continuous strength in AUD VS all currencies.
However, NZD rate decision is coming out and since we're already making higher high, we'd like to tighten our SL to prevent any unexpected selling into AUD for Tuesday and Wednesday.
We don't see any reason for AUD to suddenly lose strength while NZD suddenly gain strength, so i think the low of today's low will be sufficient especially our daily range is only 88 pips for this pair.
Move SL to 1.0639
Normally we'd add more for this pair but because the rate decision is coming in 2 days, we want to minimize our risk.
our add did not get filled and after last week's US job report, the risk sentiment is now on, that cause us to have a drawdown in this pair. I'd get out now for small loss because although NZD will face a rate cut on Wed but i suspect the same scenario will happen in NZD that after the rate cut, there will be buying power into NZD, and if we're still in risk on sentiment, then NZD/JPY will become a bullish pair.
GET OUT @ 73.25