AUDNZD - A fantastic macro short in the works
Updated
Trade set up - Those brave early on may look to enter with a break below 1.0855, smart money focusing on confirmation not speculation with a close below 1.0850 on the daily. Price target of 1.0697 to a range of 1.0518 with stops above daily close or those with longer term outlook may seek weekly high of 1.0950.
Why we like this trade -When AUDNZD trends, it can trend, and the stars are aligning for this to materialise in the short- to medium-term from a macro perspective.
Aussie housing is a thematic that has been on the radar for a while, but the signs are flashing red now and pose the single most significant risk to the Australian economy. Auction clearance rates have fallen to the lowest levels since 2012 and have emerged as the single most important economic data for traders to watch. We have already seen an impact on volumes and prices in capital cities, and when bank shares have taken a bath of late, then we have to feel there will be a real wealth effect hit. This will feed through to consumer and business confidence, and finally, future GDP reads. The government will also collect less revenue from stamp duty, which, again, will impact Australia’s growth dynamics.
This macro theme has to play out, but it is clear that the weekly clearance rates are going to get a lot more attention from FX traders, as it could be the trigger to see the RBA move to a more nuanced bias. It is our view that short AUDNZD is the best way to play this evolving theme, although we look for the market to push us into a trade and for this wait for the break out on the daily timeframe.
We have also laid out the trade case in this video
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN 684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
Why we like this trade -When AUDNZD trends, it can trend, and the stars are aligning for this to materialise in the short- to medium-term from a macro perspective.
Aussie housing is a thematic that has been on the radar for a while, but the signs are flashing red now and pose the single most significant risk to the Australian economy. Auction clearance rates have fallen to the lowest levels since 2012 and have emerged as the single most important economic data for traders to watch. We have already seen an impact on volumes and prices in capital cities, and when bank shares have taken a bath of late, then we have to feel there will be a real wealth effect hit. This will feed through to consumer and business confidence, and finally, future GDP reads. The government will also collect less revenue from stamp duty, which, again, will impact Australia’s growth dynamics.
This macro theme has to play out, but it is clear that the weekly clearance rates are going to get a lot more attention from FX traders, as it could be the trigger to see the RBA move to a more nuanced bias. It is our view that short AUDNZD is the best way to play this evolving theme, although we look for the market to push us into a trade and for this wait for the break out on the daily timeframe.
We have also laid out the trade case in this video
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN 684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
Trade active
Note
Trade update - With price testing the recent breakout, we look to tighten our stop-loss to 1.0883Trade closed: target reached
As per the original trade recommendation, our price target on AUDNZD has been reached (TP - 1.06977) and therefore, this trade has been closed.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
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