AUDNZD - Short
Updated
Short in AUDNZD. FInally got in on trace back to the newspivot level. The newspivot being the price just before the RBNZ Central Bank policy announcement on 26th May.
The Reserve Bank left its monetary policy settings unchanged, with the OCR remaining at 0.25%. However, the tone of the statement was more hawkish than we expected.
For the first time in over a year, the RBNZ published a forward projection of the OCR. This track starts to turn higher from around September 2022 – in line with market pricing and many analysts’ forecasts, but sooner than our early-2024 forecast.
The RBNZ has upgraded its activity forecasts overall. It has acknowledged the lull in activity over summer due to the lack of overseas tourists, but expects substantially higher rates of growth over the rest of this year.
The RBNZ recognises that inflation will spike higher in the near term, but continues to regard this as due to temporary factors. It expects inflation to slow to 1.5% by the middle of next year, before tracking up to a little over 2% in the following years.
The RBNZ noted that it will maintain current policy settings until inflation is sustained at the 2% target midpoint, and employment is at its maximum sustainable level – this was changed from “at or above”.
That reflects some concern around where ‘maximum sustainable’ lies, given growing reports of skills shortages while the borders remain closed.
The RBNZ expects wage growth to reach levels not seen since before the GFC, even with the unemployment rate falling only marginally over the coming years.
This contrasts with AUD :
They reiterated that they will not increase the Cash Rate until actual inflation is sustainably within their 2%-3% target range and that they are committed to maintaining highly supportive monetary conditions to support a return to full employment and for inflation to be consistent with their target. Reiterated that labour market is unlikely to be tight enough to spur materially higher wage growth until 2024 at the earliest.
According to TD some (TD Securities, ANZ and Westpac) the omission of a key sentence talking about the willingness to undertake further bond purchases shows the QE
program is currently under review. After the statement these banks changed their expectations for the July meeting and no longer see the RBA extending the YCC target
bond to the Nov-2024 contract and no longer sees the bank announcing another A$100 worth of QE.
TD Securities expects a smaller package of A$50 and Westpac expects a more flexible weekly open-ended program worth A$5 per week and argues the press conference
scheduled for Gov Lowe afterwards won’t be necessary just to announce the previously expected A$100 or even a A$50 program, but explanation of an open-ended
weekly program would require the bank to carefully explain that such a move is not a taper but more flexibility and actually more dovish.
The Reserve Bank left its monetary policy settings unchanged, with the OCR remaining at 0.25%. However, the tone of the statement was more hawkish than we expected.
For the first time in over a year, the RBNZ published a forward projection of the OCR. This track starts to turn higher from around September 2022 – in line with market pricing and many analysts’ forecasts, but sooner than our early-2024 forecast.
The RBNZ has upgraded its activity forecasts overall. It has acknowledged the lull in activity over summer due to the lack of overseas tourists, but expects substantially higher rates of growth over the rest of this year.
The RBNZ recognises that inflation will spike higher in the near term, but continues to regard this as due to temporary factors. It expects inflation to slow to 1.5% by the middle of next year, before tracking up to a little over 2% in the following years.
The RBNZ noted that it will maintain current policy settings until inflation is sustained at the 2% target midpoint, and employment is at its maximum sustainable level – this was changed from “at or above”.
That reflects some concern around where ‘maximum sustainable’ lies, given growing reports of skills shortages while the borders remain closed.
The RBNZ expects wage growth to reach levels not seen since before the GFC, even with the unemployment rate falling only marginally over the coming years.
This contrasts with AUD :
They reiterated that they will not increase the Cash Rate until actual inflation is sustainably within their 2%-3% target range and that they are committed to maintaining highly supportive monetary conditions to support a return to full employment and for inflation to be consistent with their target. Reiterated that labour market is unlikely to be tight enough to spur materially higher wage growth until 2024 at the earliest.
According to TD some (TD Securities, ANZ and Westpac) the omission of a key sentence talking about the willingness to undertake further bond purchases shows the QE
program is currently under review. After the statement these banks changed their expectations for the July meeting and no longer see the RBA extending the YCC target
bond to the Nov-2024 contract and no longer sees the bank announcing another A$100 worth of QE.
TD Securities expects a smaller package of A$50 and Westpac expects a more flexible weekly open-ended program worth A$5 per week and argues the press conference
scheduled for Gov Lowe afterwards won’t be necessary just to announce the previously expected A$100 or even a A$50 program, but explanation of an open-ended
weekly program would require the bank to carefully explain that such a move is not a taper but more flexibility and actually more dovish.
Trade active
Risk 1.57%, 2.36RChart 1 - Good respect of the underside of the trendline. SMAs starting to roll over.
Chart 2 - Weekly/Monthly Pivot lower at 1.7000, expect retest ?
Chart 3 - Not so good as close above 21 EMA, so could act as support.
Chart 4 - Retest of News Pivot and trendline break retest.
Trade active
Note
Chart 1 - Retraced back up to retest the underside trendline.Chart 2 - Weekly/Monthly R1 if trendline breaks like to see R1 hold.
Chart 3 - 21 EMA is holding as support now, close to a EMA Crossover upwards.
Chart 4 - Retest of News Pivot and trendline break retest. 2nd time.
Technically trade does not look as strong now, but overall fundamentally still ok.
AUD Tier 2 Data
HIA Home Sales and Westpac Consumer Sentiment shouldn't move market much.
Trade active
Note
Difficult trade to hold onto, hasn't been in my favour for most of the trade.NZD GDP and AUD Employment figues, as well as FOMC overnight.
Gut feel is will be stopped out, but going to hold until after data to see.
A week AUD Employment and Strong NZD GDP would be the ideal catalyst.
Trade active
So very strong NZD GDP Data has pushed this back down into profit, as it confirms the RBNZ banks bias towards tapering and interest rate rise.Also Governor Lowe of RBA talking this morning an being quite dovish on interest rate rises still, maybe jawboning before positive employment data.
2nd risk event is AUD Job data out in 19 mins.
Trade active
So very strong AUD Employment data just came out.30k estimate with 115k actual
Unemployment exp 5.5%, actual 5.1%
Question is what is more important to the marker, NZD GDP or AUD Employment.
AUD Employment may cause a rethink for July RBA meeting.
Trade active
Note
I took half profit at 1 x ATR a 1.07124 on 1st July, not moved stop to BE.Big risk off reversal today, selling high in NZD and AUD. NZD fairing worse so far today.
Now experimenting with NNFX trading system. My system is telling me to hold the trade since no exit signal as yet. As this is a daily candle signal system, i need to wait until 5am (Daily Candle Close) to review signals. As of writing now 11:15pm.
C1 - Stay Short
C2 - Stay Short, weakening.
BL - Stay Short
VL - Less Volume in push up
EX - Stay Short, but bit turn up
Trade active
As of writing getting close to exit signal.
Note
C1 - Stay ShortC2 - Stay Short, weakening.
BL - Stay Short
VL - Less Volume in push up
EX - Stay Short, will this close above o?
Trade active
Note
C1 - Stay ShortC2 - Stay Short, weakening.
BL - Stay Short
VL - Less Volume in push up
EX - Stay Short, could be exit signal tomorrow?
Trade active
Major NZD Rate Decision, have taken 1st profit, stop at BE. News rules states close on major news when less than 1 ATR.Candle hasn't closed yet, but looks close to turning over C1 and Baseline.
Probably follow rules and hold until daily close tomorrow. RBNZ rate decision is 10am tomorrow.
Trade active
Note
Yesterday close was close to closing.C1 - Stay Short
C2 - Stay Short, weakening but in deadzone.
BL - Stay Short
VL - Less Volume in push up, but big volume in current downswing due to RBNZ
EX - Stay Short, exit signal invalidated for now
If daily close below 1.0649 (2 x ATR), move SL to 1.5 ATR.
Trade closed: target reached
Finally took 2nd TP2.
Total profit on trade 3.31%.
Although it hit my TP2, 300 pips down, happy to close to to RBNZ meeting on 2 days.
Our rate hikes priced in ?
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