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Newzealanddollar

AUDNZD 2022-Jan-23 Trade Idea (No Indicators)AUDNZD Trade Setup Idea Analysis Using Only Trend, Horizontal Support Level, and Horizontal Fibonacci Retracement Support Level. First, identify the direction of the trend. Second, draw horizontal support level across the highs. Third, drag Fibonacci Retracement Tool from previous higher low to higher high. Next, wait for price to retrace to the level where 50% Fibonacci Retracement Level overlaps with Horizontal Support Level. Enter using a buy limit. Enter another order after a bull candle forms on the level.
Long
by TradeLive-
NZD USD - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: WEAK BULLISH 1. Monetary Policy The RBNZ underwhelmed some market participants who were looking for a 50bsp hike at their last policy meeting and the bank delivered a 25bsp hike as consensus was expecting. Even though the NZD took a plunge after the meeting, we don’t think markets are really giving NZD the upside it deserves after the Nov RBNZ decision. Not referring to the knee-jerk lower after the 25bsp hike of course as that was fully priced in and always ran the risk of underwhelming the bulls, but the outlook in the MPR justifies more NZD strength. The upgrades to the economic outlook between Aug and Nov were a lot more positive than expected, with growth seen lower in 2022 but much higher in 2023, CPI seen higher throughout 2022 and 2023, Unemployment seen lower throughout the forecast horizon, and of course the big upgrade to the OCR which is now seen at 2.6% by 2024. The bank also brought forward their expectation of reaching the 2.0% neutral rate by 5 quarters. For now, incoming data will be very important and any new developments with the new Omicron variant will be closely watched. Any major deterioration can see markets pricing out some of the hikes that has been priced in and is a risk to the outlook. However, if data stays solid, the recent sell off in the NZD does seem at odds with the fundamental, policy and economic outlook. 2. Economic and health developments Even though the NZ government has abandoned a covid-zero strategy, a ramp in Omicron cases can of course see further restrictions being announced if things get serious so the virus is worth keeping on the radar. Turning to the economic data, the recent macro data has been much better than both the markets and the RBNZ had expected, but markets have not been too bothered with the incoming data and have not given the NZD the upside it deserves. For now, based on the economic and policy outlook the NZD still seems undervalued at current prices, but we need to keep close track of the overall risk sentiment. 3. Global Risk Outlook As a high-beta currency, the NZD usually benefits from overall positive risk sentiment as well as environments that benefit pro-cyclical assets. Thus, both short-term (immediate) and med-term (underlying) risk sentiment will always be a key consideration for the NZD. 4. CFTC Analysis Latest CFTC data showed a positioning change of +273 with a net non-commercial position of -8331. Positioning changes has been very limited for the NZD in the past few weeks and with the flush out of net-longs among Leveraged Funds in December we can see that positioning is close to neutral for both large specs and leveraged funds. The sentiment signal from the unwind in positioning means right now we are happy to wait for incoming econ data or strong risk sentiment impulses to give better sense of where the NZD goes next. 5. The Week Ahead Finally, some tier 1 data due for the NZD this week in the form of QQ CPI scheduled for Wednesday. For the past few months, the NZD has not traded in line with it’s current fundamental outlook. Despite very solid economic data and the most hawkish central bank among the majors, the currency has failed to hold onto any real upside momentum. The recent market jitters in equities have also not been kind to the high beta currency and have seen further depreciation, even against its high beta counterparts like the AUD and CAD. So, it goes without saying that the incoming CPI data will be important, because if the NZD fails to sustain any upside after another possible beat, then that will tell us a lot about the market’s willingness to buy the NZD. In the event of a bigger-than-expected miss, AUDNZD longs are looking attractive with the RBA still needing to turn hawkish it could see the AUD gain ground as massive net-short positioning continues to unwind. Apart from that, risk sentiment will as always be important for the high betas, especially after last week’s strong push lower in equities. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy The Fed turned a lot more hawkish than expected in Dec. They doubled the pace of tapering to $30 billion per month which will see QE concluded by March 2022 as was widely expected. Surprisingly though the Summary of Econ Projections showed the median dot plot pencilled in 3 hikes for 2022 (up from the previous 1), confirming Fed Fund Future expectations. Fed Chair Powell explained they hadn’t decided whether to pause between the end of tapering and a first hike but reiterated that rates will likely only rise when QE has concluded. Another positive shift was Powell’s comments that they could raise rates before full employment has been met due to high inflation , and stated that with inflation above target, they cannot wait too long to get to maximum employment as current inflation levels is seen as a threat to max employment. The hawkish tilt went further to note that the bank started discussing the balance sheet but said no decisions were made on when QT might commence. Even though the dots projected 3 hikes for 2022, the updated rate trajectory only showed 1 additional hike over the forecast horizon, which combined with a lower terminal rate was less hawkish than some had feared. Nonetheless, the meeting marked a material hawkish shift from the Fed, putting it on par with the likes of the RBNZ. The meeting minutes also revealed that the QT discussion saw majority of members thinking it appropriate to start QT soon after rate lift off and another more hawkish tilt than expected from the Fed. 2. Global Risk Outlook The growth & inflation outlook for the US and the globe will be key for the USD. The USD is often inversely correlated to global growth & inflation , doing bad during reflationary environments (growth and inflation accelerating), while the USD usually does well in disinflationary environments (growth and inflation decelerating). Thus, with expectations that both growth and inflation will decelerate this year, both in the US and the globe, that should be a positive input for the USD in the med-term . However, incoming data will also be important to see how the Fed responds to it, where a worsening outlook that deteriorates much faster than expected could see a dovish pivot from the Fed which could mean downside for the USD if money markets start pricing out hikes (especially with markets now expected just over 4 hikes for 2022). 3. CFTC Analysis Latest CFTC data showed a positioning change of -1458 with a net non-commercial position of +36434. The shortterm unwinding of stretched USD longs played out exactly as expected but was also short-lived in the midst of the recent strong risk off moves in certain parts of the market. Surprisingly, the big flush lower in the USD has not showed up in the CFTC data as expected with very little change to the overall positioning. In the current context, the stretched long positioning makes the USD vulnerable in the event that the Fed does not deliver the very hawkish tone expected of them in this week’s upcoming FOMC meeting. 4. The Week Ahead For the USD the big focus this week will be overall risk sentiment and the first FOMC meeting for 2022 on Wednesday, followed by Friday’s Core PCE and Employment Cost index prints. The latter will of course be important given the inflation outlook with more emphasis recently on the odds of a possible wage spiral affect. However, the main event will be the FOMC, where the meeting is expected to serve as a signalling meeting to pave the way for a 25bsp hike in March and to provide more clarity on the bank’s balance sheet plans. With a March hike sitting close to a 90% probability, and markets already fully pricing in 4 hikes this year, the bar has been set quite high for a hawkish surprise. However, there are also some participants that think the recent econ data ( CPI YY >7% and Unemployment <4%) justifies an early end to the Fed’s QE program instead of allowing tapering to run it’s planned course until March. That would certainly give a more hawkish feel to the meeting and could see markets pricing in an even earlier and faster pace of QT if confirmed. But, if the Fed does not deliver on an early end to QE , and does not offer a strong enough signal that the 4 hikes priced by the market is justified, we could be in store for some moderation in the rise in yields and the USD and could also prove to be supportive for equities which ended last week in quite bad shape.
by thunderpips
19
AUDNZD: Consolidation & Complete Indecision 🇦🇺🇳🇿 For the 4 consequent weeks, AUDNZD is consolidating. The pair is coiling within a horizontal trading range. From a current perspective I see two potential scenarios: In case of a bullish breakout of the range (candle close above 1.0645 - 1.0668) a bullish continuation to 1.073 level will be expected. In case of a bearish breakout of the range (candle close below 1.0566 - 1.059) a bearish move to 1.057 level will be expected. And while the market is staying within the boundaries of the range you either wait for a breakout or buy/sell its support/resistance. ❤️Please, support this idea with like and comment!❤️
Long
by VasilyTrader
12
NZD USD - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: WEAK BULLISH 1. Monetary Policy The RBNZ underwhelmed some market participants who were looking for a 50bsp hike as the bank only delivered on a 25bsp hike as consensus was expecting. Even though the NZD took a plunge after the meeting, we don’t think markets are really giving NZD the upside it deserves after the Nov RBNZ decision. Not referring to the knee-jerk lower after the 25bsp hike of course as that was fully priced in and always ran the risk of underwhelming the bulls, but the outlook in the MPR justifies more NZD strength. The upgrades to the economic outlook between Aug and Nov was positive, with growth seen lower in 2022 but much higher in 2023, CPI is seen higher throughout 2022 and 2023, the Unemployment rate seen lower throughout the forecast horizon, and of course the big upgrade to the OCR which is now seen at 2.6% by 2024, and the bank has brought forward their expectation of reaching the 2.0% neutral rate with 5 quarters. Of course, incoming data will be important (as always) and any new developments with the new Omicron variant will be watched. But barring any major deterioration in the econ data, the recent sell off in the NZD does seem at odds with the fundamental, policy and economic outlook. 2. Economic and health developments Even though the NZ government has abandoned a covid-zero strategy, a ramp in Omicron cases can of course see further restrictions being announced if things get serious so the virus is worth keeping on the radar. Turning to the economic data, the recent macro data has been much better than both the markets and the RBNZ had expected, but markets have not been too bothered with the incoming data and have not given the NZD the upside it deserves in our opinion. For now, based on the economic and policy outlook the NZD still seems undervalued at current prices, but we need to keep close track of the overall risk sentiment given the associated risks of the new variant. 3. Global Risk Outlook As a high-beta currency, the NZD benefited from the market's improving risk outlook coming out of the pandemic as participants moved out of safe-havens. As a pro-cyclical currency, the CAD enjoyed upside alongside other cyclical assets supported by reflation and post-recession recovery best. If expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the NZD in the med-term, but recent short-term jitters are a timely reminder that risk sentiment is also a very important short-term driver. 4. CFTC Analysis Latest CFTC data showed a positioning change of -424 with a net non-commercial position of -8845. Positioning changes in the past 3 to 4 weeks have shown that a lot of the previous optimism about the NZD was unwound, especially for leveraged funds. Do we think the NZD should be higher? Yes, we do, but markets have not been having it for the past few weeks. For now, it might be best to wait for incoming economic and virus data to provide us with short-term catalysts before we engage the currency back to the upside. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy A lot more hawkish than expected is how the Fed’s Dec decision can be summed up. The Fed doubled the pace of tapering to $30 billion per month which will see the QE program conclude by March 2022 as was widely expected. The big change came from the updated Summary of Econ Projections where the median dot plot pencilled in 3 hikes for the Fed next year (up from just shy of 1 hike projected just 3 months ago), confirming money market and Fed Fund Future expectations. Fed Chair Powell explained they hadn’t decided whether to pause between the end of tapering and a first hike but reiterated that rates will likely only rise when the taper has concluded. Another positive shift was Powell’s comments that the balance of goals means it could possibly raise rates before full employment has been met due to high inflation , and also stated that with inflation above target, they cannot wait too long to get to maximum employment with current levels of inflation described as a threat to full employment. The hawkish tilt even went so far that the bank started to discuss the balance sheet but said they didn't make any decisions on when the balance sheet would shrink. Even though the dots projected 3 hikes for 2022, the updated rate hike trajectory only showed 1 additional hike over the forecast horizon, which combined with a lower terminal rate was less hawkish than some had feared. Nonetheless, with this recent meeting the Fed is now the second most hawkish CB after the RBNZ and should be supportive for the USD in the med-term . This past week’s meeting minutes also revealed that the bank has started discussing QT with majority of members thinking it’s appropriate to start QT soon after rate lift off which was a much more hawkish tilt than expected from the Fed. 2. Real Yields With the hawkish tilt from the Fed, it should see breakeven inflation rates fall faster than US10Y as a more aggressive Fed should see med-term growth & inflation expectations fall. Rising real yields should be good for the USD as well and one to keep on the radar, especially after this weeks divergence. 3. Global Risk Outlook What happens to growth and inflation this year will be key for the USD, not only growth and inflation in the US though but also on a global scale. The USD usually does bad in reflationary environments (where growth and inflation accelerates globally), while the USD usually does very well when growth and inflation decelerates globally). So, expectations that we are seeing a slowdown in both of them globally should be a positive input for the USD in the med-term . However, it also means there will be a lot of focus on the incoming data to see how it develops. 4. CFTC Analysis Latest CFTC data showed a positioning change of +2289 with a net non-commercial position of +39078. With large specs net-longs close to 2019 highs and leverage funds USD longs also looking stretched, and with a lot of the Fed hawkishness arguably priced in, the USD has been looking vulnerable to some unwinding, which is what we saw this past week. Even though the Fed remains on a hawkish path (for now) and the USD remains bullish from a fundamental outlook point of view, with positioning where it is right now, any recovery in risk sentiment or bad economic data in the US relative to the rest of the world could continue to add some pressure on the Greenback in the short-term. However, it will take a lot to change the overall fundamental bullish outlook given what markets are expecting from 2022.
by thunderpips
12