AUDNZD long

Updated

I am looking to buy AUDNZD at the green box.

The NZD labour data was pretty weak this morning. Chances of a interest hike for the AUD ios at 64% on November 7th while the reserve bank of New Zealand has a 89% chance of holding rates on the 29th of November.

You can see in one of the picture that I will add below that AU10yY - NZ10Y are pushing higher too

We broke a strong trendline and rejected 0.0900 and will buy for the continuation

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See Yields pushing higher

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reducing the zone. I will take it once it hits that green zone

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I was reading a bank research paper from MUFG and this is what they had to say about AUDNZD:

It has been a relatively quiet trading session overnight. The biggest movers amongst G10 currencies have been the Australian dollar and yen as the US dollar continues to trade on the back foot. It has resulted in USD/JPY briefly falling back below the 148.00- level. The Australian dollar has been one of the main beneficiaries from the sharp improvement in global investor risk sentiment this month. MSCI’s ACWI global equity index has staged a powerful rebound (~10%) since late last month supported by building optimism over a softer landing for the global economy encouraged by slowing inflation and more confidence that central banks have ended their rate hike cycles. TheAustralian dollar has strengthened by around 4.5% against the US dollar, and in recent days has climbed back above resistance from the 200-day moving average that comes in at around 0.6580 for the first time since July. It is returning to the narrow trading range between 0.6600 and 0.6800 that held for most of the time between November of last year and July of this year. The Australian dollar is also deriving some support from expectations that the RBA’s policy stance could diverge from other G10 central banks. While market participants are increasingly confident that the major central
banks of the Fed, ECB and BoE have finished their hiking cycles, the Australian rate market continues to price in higher probability of one further hike by the RBA. There is currently around 16bps of hikes priced in by the May RBA policy meeting. At the same time, market participants expect the RBA’s policy rate to finish next year largely unchanged in comparison to the lower policy rates expected from other major central banks. Those relatively hawkish policy expectations were supported overnight by comments from RBA Governor Bullock who stated that demand in the economy is proving “a little bit stronger” than expected and helping to keep inflation pressures elevated. She noted that “businesses are finding that demand is sufficient that they are able to pass those costs on” although she emphasized that “we’re in a period now where we have to be a little bit careful”. She believes that Australian households and businesses are in a pretty good position, and that those coming off fixed-rate loans on to higher rates are managing quite well. The comments helped to offset the release of the weaker retail sales report for October. The next market focus will be the release tomorrow of the monthly Australian CPI report for October.

In contrast to the relatively hawkish policy outlook for the RBA, the New Zealand rate market has been moving more in line with other major central banks. Market
participants are similarly more confident that the RBNZ’s rate hike cycle has ended, and has moved to price in around 55bps of cuts by the end of next year. One important difference is that the policy rate in New Zealand (5.50%) is already at more restrictive levels than in Australia (4.35%). Furthermore, the recent top tier economic data flow from New Zealand has disappointed expectations. Since the RBNZ’s last policy meeting on 4th October, the release of the CPI report for Q3 revealed inflation slowed more than expected to 5.6% and the labour market for Q3 revealed an unexpected quarterly contraction in employment. It has encouraged expectations that the RBNZ could adopt less hawkish policy guidance at tomorrow’s meeting. In the FX market the recent widening of yield spreads in favour of the Australian dollar over the New Zealand dollar has not been fully reflected in the AUD/NZD rate. The New Zealand dollar has benefitted more this month from the improvement in global investor risk sentiment. Yield spreads indicate that there is room for AUD/NZD to move back closer to the 1.1000-level.

Trade closed: stop reached

RBNZ messed up this trade

PMTradeALot

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