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NZD-USD

NZD USD - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: WEAK BULLISH 1. Monetary Policy More hawkish than expected can sum up the February RBNZ policy decision. Even though the bank delivered a 25bsp hike and did not surprise with a 50bsp hike (probability was at 30% before the meeting), they managed to surprise markets with their upgraded projections and plans for QT. Markets were anticipating the bank to take a passive QT route by ceasing reinvestments, but instead announced that they will start to sell their bond holdings from July. Furthermore, markets were looking for the bank to upgrade their OCR terminal rate projection to between 2.8%-3.0% from 2.6% but instead increased it 3.4%, essentially adding another 3 hikes to their forecasts for the current hiking cycle. With the latest decision the RBNZ has once again showed that it’s the most hawkish central bank among the majors. However, price action will tell whether it’s been enough to finally see the markets giving the NZD the upside it deserves. 2. Economic and health developments The economic outlook looks solid for New Zealand, with growth expected to accelerate, inflation expected to stay high, home prices still close to 30%, commodity prices doing well, and now also a ratified trade deal with China that is expected to open up more Chinese markets for New Zealand goods. 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 Positioning changes has been very limited for the NZD in the past few weeks with major market participants all still holding onto net-short positions but roughly in the middle of the pack across all three. For now, positioning isn’t giving us many signals as to whether the next leg is more likely to be higher or lower for the NZD. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy The Jan FOMC decision was hawkish on multiple fronts. The statement signalled a March hike as expected, but Chair Powell portrayed a very hawkish tone. Even though Powell said they can’t predict the rate path with certainty, he stressed the economy is in much better shape compared to the 2015 cycle and that will have implications for the pace of hikes (more and faster). Furthermore, he explained that there is ‘quite a bit of room’ to raise rates without damaging employment, which suggests upside risks to the rate path. A big question going into the meeting was how concerned the Fed was about recent equity market volatility . But the Chair explained that markets and financial conditions are reflecting policy changes in advance and that in aggregate the measures they look at isn’t showing red lights. Thus, any ‘Fed Put’ is much further away and inflation is the Fed’s biggest concern right now. The Chair also didn’t rule out the possibility of a 50bsp hike in March or possibly hiking at every meeting this year, which was hawkish as it means the Fed wants optionality to move more aggressive if they need to. We didn’t get new info on the balance sheet and Powell reiterated that they’re contemplating a start of QT after hiking has begun and they’ll discuss this in coming meetings. Overall, the tone and language were a lot more hawkish than the Dec meeting and more hawkish than consensus was expecting. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. The USD usually appreciates when growth & inflation slow (disinflation) and depreciates when growth & inflation accelerates (reflation). Thus, current expectations of a cyclical slowdown (and possible stagflation) are good for the Dollar. Incoming data will be watched in relation to the ‘Fed Put’ as there are many similarities between now and 4Q18, where the Fed were also tightening into a slowdown. If growth data slows and the Fed stays hawkish it’s a positive for the USD, once the Fed pivots dovish that’ll be a negative for the USD. 3. CFTC Analysis The USD remains a net-long across major participants, but with price action looking stretched and with peak hawkishness for the Fed arguably close with >6 hikes priced, the risk to reward of chasing USD strength is not very attractive right now. Continued stagflation and geopolitical risks it mean that stretched positioning might not be as important as usual. JP Morgan also shared some stats that suggest the USD has a historical tendency to strengthen in the 6 months going into a first hike but then to weaken during the 6 months directly after a first hike. This is an interesting phenomenon which is worth keeping in mind given the USD’s recent performance.
by thunderpips
1
NZD USD - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: WEAK BULLISH 1. Monetary Policy More hawkish than expected can sum up the February RBNZ policy decision. Even though the bank delivered a 25bsp hike and did not surprise with a 50bsp hike (probability was at 30% before the meeting), they managed to surprise markets with their upgraded projections and plans for QT. Markets were anticipating the bank to take a passive QT route by ceasing reinvestments, but instead announced that they will start to sell their bond holdings from July. Furthermore, markets were looking for the bank to upgrade their OCR terminal rate projection to between 2.8%-3.0% from 2.6% but instead increased it 3.4%, essentially adding another 3 hikes to their forecasts for the current hiking cycle. With the latest decision the RBNZ has once again showed that it’s the most hawkish central bank among the majors. However, price action will tell whether it’s been enough to finally see the markets giving the NZD the upside it deserves. 2. Economic and health developments The economic outlook looks solid for New Zealand, with growth expected to accelerate, inflation expected to stay high, home prices still close to 30%, commodity prices doing well, and now also a ratified trade deal with China that is expected to open up more Chinese markets for New Zealand goods. 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 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 Dec we can see that positioning is close to neutral for large specs, asset managers and leveraged funds. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy The Jan FOMC decision was hawkish on multiple fronts. The statement signalled a March hike as expected, but Chair Powell portrayed a very hawkish tone. Even though Powell said they can’t predict the rate path with certainty, he stressed the economy is in much better shape compared to the 2015 cycle and that will have implications for the pace of hikes (more and faster). Furthermore, he explained that there is ‘quite a bit of room’ to raise rates without damaging employment, which suggests upside risks to the rate path. A big question going into the meeting was how concerned the Fed was about recent equity market volatility . But the Chair explained that markets and financial conditions are reflecting policy changes in advance and that in aggregate the measures they look at isn’t showing red lights. Thus, any ‘Fed Put’ is much further away and inflation is the Fed’s biggest concern right now. The Chair also didn’t rule out the possibility of a 50bsp hike in March or possibly hiking at every meeting this year, which was hawkish as it means the Fed wants optionality to move more aggressive if they need to. We didn’t get new info on the balance sheet and Powell reiterated that they’re contemplating a start of QT after hiking has begun and they’ll discuss this in coming meetings. Overall, the tone and language were a lot more hawkish than the Dec meeting and more hawkish than consensus was expecting. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. Thus, USD usually appreciates when growth & inflation slow (disinflation) and depreciates when growth & inflation accelerates (reflation). With expectations that growth and inflation will decelerate this year that should be a positive input for the USD. However, incoming data will also be important in relation to the ‘Fed Put’. There are many similarities between now and 4Q18, where the Fed were also tightening aggressively going into an economic slowdown. As long as growth data slows and the Fed stays aggressive that is a positive for the USD, but if it causes a dovish Fed pivot and lower rate repricing it would be a negative input for the USD. 3. CFTC Analysis With peak hawkishness for the Fed arguably close to baked in for the USD, it’s been interesting to view the positioning unfold in the past few weeks. The USD remains a net-long across large specs, leveraged funds and asset managers, but price action has been looking stretched. However, given growing stagflation and geopolitical risks it means stretched positioning might not be as important right now, but worth keeping in mind of course.
by thunderpips
1
NZD USD - FUNDAMENTAL DRIVERSNZD FUNDAMENTAL BIAS: WEAK BULLISH 1. Monetary Policy More hawkish than expected can sum up the February RBNZ policy decision. Even though the bank delivered a 25bsp hike and did not surprise with a 50bsp hike (probability was at 30% before the meeting), they managed to surprise markets with their upgraded projections and plans for QT. Markets were anticipating the bank to take a passive QT route by ceasing reinvestments, but instead announced that they will start to sell their bond holdings from July. Furthermore, markets were looking for the bank to upgrade their OCR terminal rate projection to between 2.8%-3.0% from 2.6% but instead increased it 3.4%, essentially adding another 3 hikes to their forecasts for the current hiking cycle. With the latest decision the RBNZ has once again showed that it’s the most hawkish central bank among the majors. However, price action will tell whether it’s been enough to finally see the markets giving the NZD the upside it deserves. 2. Economic and health developments The economic outlook looks solid for New Zealand, with growth expected to accelerate, inflation expected to stay high, home prices still close to 30%, commodity prices doing well, and now also a ratified trade deal with China that is expected to open up more Chinese markets for New Zealand goods. 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 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 Dec we can see that positioning is close to neutral for large specs, asset managers and leveraged funds. USD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy The Jan FOMC decision was hawkish on multiple fronts. The statement signalled a March hike as expected, but Chair Powell portrayed a very hawkish tone. Even though Powell said they can’t predict the rate path with certainty, he stressed the economy is in much better shape compared to the 2015 cycle and that will have implications for the pace of hikes (more and faster). Furthermore, he explained that there is ‘quite a bit of room’ to raise rates without damaging employment, which suggests upside risks to the rate path. A big question going into the meeting was how concerned the Fed was about recent equity market volatility . But the Chair explained that markets and financial conditions are reflecting policy changes in advance and that in aggregate the measures they look at isn’t showing red lights. Thus, any ‘Fed Put’ is much further away and inflation is the Fed’s biggest concern right now. The Chair also didn’t rule out the possibility of a 50bsp hike in March or possibly hiking at every meeting this year, which was hawkish as it means the Fed wants optionality to move more aggressive if they need to. We didn’t get new info on the balance sheet and Powell reiterated that they’re contemplating a start of QT after hiking has begun and they’ll discuss this in coming meetings. Overall, the tone and language were a lot more hawkish than the Dec meeting and more hawkish than consensus was expecting. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. Thus, USD usually appreciates when growth & inflation slow (disinflation) and depreciates when growth & inflation accelerates (reflation). With expectations that growth and inflation will decelerate this year that should be a positive input for the USD. However, incoming data will also be important in relation to the ‘Fed Put’. There are many similarities between now and 4Q18, where the Fed were also tightening aggressively going into an economic slowdown. As long as growth data slows and the Fed stays aggressive that is a positive for the USD, but if it causes a dovish Fed pivot and lower rate repricing it would be a negative input for the USD. 3. CFTC Analysis With peak hawkishness for the Fed arguably close to baked in for the USD, it’s been interesting to view the positioning unfold in the past few weeks. The USD remains a net-long across large specs, leveraged funds and asset managers, but price action has been looking stretched. However, given growing stagflation and geopolitical risks it means stretched positioning might not be as important right now, but worth keeping in mind of course.
by thunderpips
NZDUSD Structure Evolving, Still Watch for Sell hi traders: Previous sell forecast didn't develop into further confirmation to sell, and price has managed to move up now to another previous highs. This time, price is event better in terms of the bearish reversals. WE can now see a double tops, larger ascending structure, and smaller ascending within. The price continue to evolve structure, but higher time frame and bearish downside bias not change. Now that we have see a strong bearish reversal impulse onw the lower time frame, best to see if further downside can be confirmed, if price impulse down out of the ascending channel, and form continuation correction. That would be the ideal next sell setup that can play down to the lows. Thank you
Short
by jojofang0901
14
Possible trend shift in NZDUSD – going short | 25th FebSignal ID: 79543 Time Issued: Thursday, 24 February 2022 19:00:15 GMT Status: open Entry: 0.66558 - 0.66982 Limit: N/A Stop Loss: 0.67616 The Tidal Shift Strategy has just sold NZDUSD at 0.6677. The system recommends entering this trade at any price between 0.66558 and 0.66982. The signal was issued because our Speculative Sentiment Index has hit its most extreme positive level for the past 145 trading hours at 1.73721, which suggests that the NZDUSD could be trending downwards.The 14-period Average True Range on a daily chart is 0.00169, so the stop loss has been set at 0.67616. This stop loss order is a trailing stop that will move down as the market moves down. There is no profit target for this strategy. We expect to be closed by the stop loss.Tidal Shift is a trend trading strategy that aims to catch shifts in trend using trader sentiment as an indicator. The strategy looks to buy when the Speculative Sentiment Index reaches its lowest value for the past 145 trading hours, and looks to short when it reaches its highest value for the past 145 trading hours. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Short
by FXCM
Possible trend shift in NZDUSD – going short | 25th Feb Signal ID: 79543 Time Issued: Thursday, 24 February 2022 19:00:15 GMT Status: open Entry: 0.66558 - 0.66982 Limit: N/A Stop Loss: 0.67616 The Tidal Shift Strategy has just sold NZDUSD at 0.6677. The system recommends entering this trade at any price between 0.66558 and 0.66982. The signal was issued because our Speculative Sentiment Index has hit its most extreme positive level for the past 145 trading hours at 1.73721, which suggests that the NZDUSD could be trending downwards.The 14-period Average True Range on a daily chart is 0.00169, so the stop loss has been set at 0.67616. This stop loss order is a trailing stop that will move down as the market moves down. There is no profit target for this strategy. We expect to be closed by the stop loss.Tidal Shift is a trend trading strategy that aims to catch shifts in trend using trader sentiment as an indicator. The strategy looks to buy when the Speculative Sentiment Index reaches its lowest value for the past 145 trading hours, and looks to short when it reaches its highest value for the past 145 trading hours. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary, and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interest arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed on the website.
Short
by SCLOWs
NZDUSD MULTITIMEFRAME ANALYSISHello Traders, Price on NZDUSD Weekly Timeframe is approaching an important Resistance area to continue to sell trend. Our intention is to continue selling NZDUSD using Lower Timeframes. If all our entry rules are met we will be taking a SELL Entry from 1H timeframe. BIAS: SELL (If our entry rules are met) Timeframes for high precision entry: 60 Follow for Free Entry Signals on this trade and others from Professional Traders. IMPORTANT: Risk Management is integral in trading. Please make sure you're using safe risk management principles for your account for all trades.
Short
by AssociatedMarkets
Today’s Notable Sentiment ShiftsNZD – The New Zealand dollar jumped to five-week highs on Wednesday as the RBNZ hiked rates by 25 basis points and signalled a more aggressive path forward may be necessary. Commenting on the RBNZ’s February meeting, Westpac stated that “the biggest surprise was the extent of the lift in the projected OCR track – higher even than our top-of-the-market forecast of 3%... We continue to expect a series of 25bp hikes at upcoming policy reviews. However, given how much work the RBNZ believes it has ahead of it, the risk of a 50bp move at any given meeting remains live.”
by thunderpips
2
#NZDUSD approaching pivot, potential for a rise! With price moving above the ichimoku cloud, we are bias that price will rise to our take profit of 0.68527 in line with the horizontal swing high resistance from our entry of 0.67699 in line with the 161.8% Fibonacci extension and the horizontal overlap support. Alternatively, price may break our entry structure and head for our stop loss at 0.67395 in line with the 161.8% Fibonacci extension and the horizontal overlap support
Long
by Rockqet