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NZ10Y

Kiwi sinks to new March lowThe NZDUSD pair (affectionately known as the kiwi) hit a new March low today of 0.70879 during a risk on Asian session. NZ 10 year rates have also dropped to a March low squeezing the NZD and USD carry trade to its smallest margin this month. This drop in NZ 10 Yields is reflective across the globe, but also helped by the RBNZ buying bonds at the longer end of the market to stave off growing rates. So unless something changes with the USD, Fed or RBNZ, expect the kiwi to remain firmly grounded for now.
by majicktrader
NZDUSD carry trade shrinksAs the US 10 year yields rise - they impact more than just the price of stocks. The Carry trade or difference between a funding currency and investment currency is also impacted. While both New Zealand and the US ten year rates are rising, the difference between New Zealand 10 Year Yields and US 10 Year rates is diminishing. This makes the NZDUSD carry trade less appealing, for this reason the currency falls. The stronger the gap between the two yields, as we saw in earlier March, the higher the Kiwi climbs. At the moment the Kiwi is well below recent price action. Recent Q4 GDP showing that the economy showing was not as growing as expected has also added to the NZDUSD woes.
TVC:NZ10Y
by majicktrader
10 Year Rates Rocket on inflation fearsBond Yields are going higher and fast. Since January bond yields have increased across the board, rising quickly in the USA, Australia, New Zealand and Canada especially. Economies are rebounding and looking to show significant GDP growth during 2021 thanks to the rollout of the vaccine and reopening. This growth may (In the case of the US) be fuelled by additional fiscal stimulus but is certainly being underpinned by monetary stimulus which kept rates low during 2020. The rise in bond yields can be attributed directly to investors expectations of future inflation expectations. The growing rates signals that investors are seeing inflation rising faster than what Central Banks have predicted and predicting that Central Banks to lift rates earlier than most have indicated (typically around 2024). The perceived rise in inflation is largely driven by rapidly rising commodity prices. Commodity prices are at either all time highs or at record levels not seen for at least 10-15 years in the case of Copper and Iron Ore. As commodity prices increase this will flow through into inflation into the economy. E.g. Rising Iron ore prices drives up the price of steel, which makes everything from houses to cars to more expensive. It is important to note that this is all "predicted inflation", inflation in most economies is well below the levels needed for Central Banks to act. (See numbers below). Fed Chair, Jerome Powell has a view that a rebounding economy can live with slightly higher rates and a rise in commodity prices is not enough to drive inflation across the whole market. His view is that when wages and consumer prices lift, we would start to have a problem. US Actual = 1.4% Target = Moderately above 2.0% AU Actual = 0.9% Target = 2-3% CA Actual = 1.6% Target = Sustainably above 2% NZ Actual = 1.4% Target = sustained at 2% per annum Powell argues that the rise in commodity prices can be easily absorbed, and believes that much of that rise is just a temporary condition reflecting the reopening, and that prices will revert back to “normal” levels over time. However, investors are seeing that if inflation takes off, the Fed and other Central Banks will be unable to hold rates at current low levels. And if the current trend in higher yields continues, this will have significant impacts for the stock market.
TVC:AU10Y
by majicktrader
2
AUDNZD leaning AUD way despite growing NZD yields outshiningNZ Ten Year Yields have rocketed up in recent days, reaching a high of 1.54% yesterday. This is a major climb from its yearly opening where it hovered around 1%. While Australian 10 Year Yields are also growing this year, a more dovish RBA has helped to cap yield gains. At its recent meeting, the RBA opted to increase its quantitative easing program by a further A$100 billion. This is to keep the Central Bank in line with its global peers in a move to stamp out any speculation of premature tapering. So while the disparity between the two rates continues to climb, the AUDNZD, which is typically strongly correlated with the difference between the two currencies has chosen to diverge and move higher. The continued climb in Iron Ore and Copper prices has provided significant strength to the Aussie and helped it keep ahead of its rival neighbour for now.
TVC:AU10Y
by majicktrader
2
ridethepig | Best of 2020A Year in review...there is definitely something to be learned from reviewing old charts. The foundations of the year were laid in Q419/Q120 which became giant pivots in the flow. It would be wrong to talk about the new dogmas without ✅ the old ones. So,lets get straight in... 📌 Best of G10 FX... GBPUSD from 1.35-> 1.15 EURUSD from 1.09 -> 1.20 📌 Best of EM FX... USDTRY completing the +30% swing towards 7.8 📌 Best of Volatility... VIX +600% explosion from 12 towards 85 📌 Best of Commodities... The collapse in Oil 📌 Best of Equities... DAX annihilation 📌 Best of Yields... Tick lows in NZ10Y 📌 Best of Macro... The end of an economic cycle 📌 Best of Crypto... BTC breaking out on the log chart 📌 Blunder of the year... Covering $PTON too quickly In any case.... Wishing all a very happy, healthy and prosperous New Year... @ridethepig will be staying up late tonight to make sure we leave 2020 behind.
by ridethepig
28
NZ10Y @ 1% - Kiwi @ 0.722The NZ yields are sitting above a psychological level of 1% and have been flirting with this level for a couple of weeks. This is undoubtedly driving demand for the commodity currency, which has now hit 0.722 along with the general risk on mood that is pervading markets at year end. As we go into the European trading session of the year, the big question is will the risk on mood continue and the kiwi push higher? Or will traders see this new high as a profit taking opportunity?
TVC:NZ10Y
by majicktrader
NZ 10 Year Yields edge past AU - AUDNZD may fallWhile CA, US, JP and AU yields have dropped in the general risk off mood across markets, NZ Yields have gone against the grain and in the "yield- off" between the AU and NZ 10 Year Yields, NZ has just edged past their pacific neighbour, with the 1% target in mind. The AUDUSD is still trading at around $1.07, however indications are that this may dive lower, as the currency trade typically lags the yield rate differential by 1-3 days.
TVC:AU10Y
by majicktrader
ridethepig | AUDNZD Market Commentary 09.12.2020📌 Buyers attacking and maintaining the pressure! Since the initial weakness we spotted at the lows, we have seen the birth of an impulsive leg higher: Of course this is very promising, buyers have much rather played the breakup and we got our momentum gambit! Well, for those wondering what rendered the base as valid, I would point you in the direction of the NZ10Y chart which was calling for the end of NZD strength as soon as we approach the 1.00% target. We must be clear that in AUDNZD 1.055x contains a lot of interest, the ambitious dream of forcing a straight leg towards 1.075x and forcing our opponent into complete capitulation is far from fiction. We can now attack the breakout and force the aggression. The continuation might be 1.055x -> 1.062x -> 1.075x which keeps NZD under pressure. Thanks as usual for keeping the feedback coming 👍 or 👎
Long
by ridethepig
5
ridethepig | Replacing the defence in NZ YieldsComparing NZ 10Y Yield with AU 10Y Yield we can see the divergence opening up. The local stories in NZ are looking a lot worse than in Australia for now, depriving the NZ 10Y Yield of completing the base formation. On the currency side, the strategic link between AUD and NZD is being threatened by AUD breaking up and flirting to complete the leg towards 1.12 - something we have been tracking since June: On the technical flows, the NZ10Y can sweep 0.5% comfortably, where it would be then able to replace the current defence with a more solid structure for a move back towards 1.0%. Thus the 🔑 to answering direction for NZ10Y comes only with more time elapsing.
TVC:NZ10YLong
by ridethepig
2