High beta currencies like NZD coming under pressure
Updated
Here I am choosing to remain short NZD as widely mentioned in the previous ideas and choosing to play this strategically against a low yielding currency like EUR.
We are starting to see early signs that the RBNZ has turned towards an easing bias, with the bar for rate cuts being lowered, coupled with house price growth slowing we have the ingredients in the cocktail for significant room to the downside in NZD. We are seeing divergence in NZDUSD from the China equity story (see attached: "Lessons in NZDUSD") which to put simply is showing that although the growth outlook for China is improving it is no longer supportive of NZD to the same extend.
To the other side, those following my posts will also know that I am expecting the Asian rebound to be more supportive of EUR via exports.
From the technical perspective, we can clearly see the breakout from the downtrend here and the bullish move since is looking impulsive in nature.
I am targeting 1.72 for the pair with stops at 1.66.
We are starting to see early signs that the RBNZ has turned towards an easing bias, with the bar for rate cuts being lowered, coupled with house price growth slowing we have the ingredients in the cocktail for significant room to the downside in NZD. We are seeing divergence in NZDUSD from the China equity story (see attached: "Lessons in NZDUSD") which to put simply is showing that although the growth outlook for China is improving it is no longer supportive of NZD to the same extend.
To the other side, those following my posts will also know that I am expecting the Asian rebound to be more supportive of EUR via exports.
From the technical perspective, we can clearly see the breakout from the downtrend here and the bullish move since is looking impulsive in nature.
I am targeting 1.72 for the pair with stops at 1.66.
Note
Close but no cigar... US-China trade negotiations will settle the deal. We'll leave it running for the next few sessions with stops trailed to see how it plays out.Trade closed: target reached
Well done all.
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