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NZD-USD

Possible trend shift in NZDUSD – going long | 3rd FebSignal ID: 79255 Time Issued: Thursday, 03 February 2022 05:00:15 GMT Status: open Entry: 0.66064 - 0.66316 Limit: N/A Stop Loss: 0.65687 The Tidal Shift Strategy has just bought NZDUSD at 0.6619. The system recommends entering this trade at any price between 0.66064 and 0.66316. The signal was issued because our Speculative Sentiment Index has hit its most extreme negative level for the past 145 trading hours at 2.00216, which suggests that the NZDUSD could be trending upwards.The 14-period Average True Range on a daily chart is 0.00101, so the stop loss has been set at 0.65687. This stop loss order is a trailing stop that will move up as the market moves up. 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.
Long
by FXCM
Possible trend shift in NZDUSD – going long | 3rd Feb Signal ID: 79255 Time Issued: Thursday, 03 February 2022 05:00:15 GMT Status: open Entry: 0.66064 - 0.66316 Limit: N/A Stop Loss: 0.65687 The Tidal Shift Strategy has just bought NZDUSD at 0.6619. The system recommends entering this trade at any price between 0.66064 and 0.66316. The signal was issued because our Speculative Sentiment Index has hit its most extreme negative level for the past 145 trading hours at 2.00216, which suggests that the NZDUSD could be trending upwards.The 14-period Average True Range on a daily chart is 0.00101, so the stop loss has been set at 0.65687. This stop loss order is a trailing stop that will move up as the market moves up. 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.
Long
by Rockqet
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, the recent rise in Omicron cases as well as well as the PM going into self-isolation is worth keeping on the radar. Turning to the econ data, the recent macro data, including Q4 CPI data has surpassed both market and RBNZ expectations. 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 -2442 with a net non-commercial position of -10773. 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 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 In the week ahead the main focus point for the NZD will be in the incoming quarterly labour print. Consensus looks for the Unemployment Rate to drop to 3.3% from the prior of 3.4% but job growth is expected to slow to 0.4% from the prior of 2.0%. Some participants like Westpac expect the jobless rate to rise to 3.5% as labour shortages remain a concern and point out that previous data was biased lower due to the Q3 lockdowns. The bank does note that employment didn’t see a huge drop but rather a slowdown and that even with a slowdown, the labour market is still beyond the RBNZ’s view of maximum sustainable employment. The other metric to watch closely according to Westpac is the Labour Cost Index, which is expected to climb 0.8% QQ and to 2.9% for the YY measure. According to the bank the final piece required in the sustained inflation puzzle is wage costs and should become a key focus for the RBNZ in the months ahead. Now, having said all of that, we need to acknowledge that despite having the most hawkish central bank among the majors, and despite a long list of better-than-expected econ data, the market has been selling the NZD for the past couple of weeks. Thus, even though better data should be positive for the NZD, we’ll be staying patient with the NZD until price action can muster some solid signs of stopping the one-sided downside. 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 the press conference from Chair Powell portrayed a very hawkish message. 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. Furthermore, the Chair explained that there is ‘quite a bit of room’ to raise rates without dampening employment, which suggests upside risks to the rate path, especially coming from Powell. A big question markets wanted an answer for was whether the Fed was concerned about recent equity market volatility . However, the Chair explained that markets and financial conditions are reflecting policy in advance and stressed that in aggregate their measures they look at is not showing red lights. This was a clear message to markets that any ‘Fed Put’ is much further away and that inflation is the biggest focus point for the Fed right now. The Chair also didn’t rule out the possibility of hiking 50bsp in March or possibly hiking at every meeting this year, which was seen as hawkish as it means the Fed is looking for optionality to move more aggressive if they need to. On the balance sheet , we didn’t really get new info and the Chair reiterated that they are contemplating a start of QT after the hiking cycle has begun but also reiterated that they will discuss this in coming meetings. Overall, the tone and language used by the Chair were a lot more hawkish than the Dec meeting and more hawkish than some were hoping for. 2. Global & Domestic Economy As the reserve currency, the USD’s usage around the world means it usually has an inverse correlation to the health of the global economy and global trade. The USD usually gains strength when growth & inflation both slow (disinflation) and loses ground when growth & inflation accelerates (reflation). 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 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. So, incoming data will be crucial to watch. As long as growth data slows and the Fed stays aggressive that would be a positive environment for the USD, but if it causes the Fed to pivot more dovish and causes a rate repricing in money markets it would be seen as a negative input for the USD. 3. CFTC Analysis Latest CFTC data showed a positioning change of +427 with a net non-commercial position of +36861. The shortterm unwinding of stretched USD longs played out as expected at the start of the year but was also short-lived in the midst of the recent strong risk off sentiment in certain parts of the market and of course the continued hawkish stance from the Fed. 4. The Week Ahead In the week ahead the party starts all over again with a new month which means we’ll get new ISM PMI releases as well as the Jan NFP report. It’s important to keep the current economic climate in mind when looking at possible reaction functions for the USD. Usually, positive data should be USD positive and negative data USD negative when the Fed is busy with a hiking cycle, but right now there are growing fears that economic data has been slowing much faster than expected and means the Fed could be on its way to make the same mistake it did back in the end of 2018. As long as those fears persist, we might see the USD having two different reaction functions to growth and inflation data. Reacting inverse to growth data but acting correlated to inflation data. That makes this week’s incoming ISM data very interesting as the Dec data decelerated much faster than expected on the growth side, and a further miss might spark more fears about a faster slowdown. The tricky part for the USD in the week ahead is that both the ISM prints as well as the NFP report has inflation components with the ISM priced paid components and the Average Hourly Earnings on the NFP side. If growth data slows very fast that could be USD positive, but if inflation data starts decelerating much faster that could also be USD negative as it means less need for aggressive Fed policy. A tricky one for the week ahead.
by thunderpips
💡Don't miss the great sell opportunity in NZDUSDTrading suggestion: ". There is still a possibility of temporary retracement to the suggested resistance line (0.6695). if so, traders can set orders based on Price Action and expect to reach short-term targets." Technical analysis: . NZDUSD is in a range bound, and the beginning of a downtrend is expected. . The price is below the 21-Day WEMA, which acts as a dynamic resistance. . The RSI is at 36. Take Profits: TP1= @ 0.6660 TP2= @ 0.6635 TP3= @ 0.6613 TP4= @ 0.6589 TP5= @ 0.6570 SL: Break Above R2 ❤️ If you find this helpful and want more FREE forecasts in TradingView . . . . . Please show your support back, . . . . . . . . Hit the 👍 LIKE button, . . . . . . . . . . . Drop some feedback below in the comment! ❤️ Your Support is very much 🙏 appreciated!❤️ 💎 Want us to help you become a better Forex / Crypto trader? Now, It's your turn! Be sure to leave a comment; let us know how you see this opportunity and forecast. Trade well, ❤️ ForecastCity English Support Team ❤️
Short
by ForecastCity_World
8
💡Don't miss the great sell opportunity in NZDUSDTrading suggestion: ". There is still a possibility of temporary retracement to the suggested resistance line (0.6695). if so, traders can set orders based on Price Action and expect to reach short-term targets." Technical analysis: . NZDUSD is in a range bound, and the beginning of a downtrend is expected. . The price is below the 21-Day WEMA, which acts as a dynamic resistance. . The RSI is at 36. Take Profits: TP1= @ 0.6660 TP2= @ 0.6635 TP3= @ 0.6613 TP4= @ 0.6589 TP5= @ 0.6570 SL: Break Above R2 ❤️ If you find this helpful and want more FREE forecasts in TradingView . . . . . Please show your support back, . . . . . . . . Hit the 👍 LIKE button, . . . . . . . . . . . Drop some feedback below in the comment! ❤️ Your Support is very much 🙏 appreciated! ❤️ 💎 Want us to help you become a better Forex / Crypto trader ? Now, It's your turn ! Be sure to leave a comment; let us know how you see this opportunity and forecast. Trade well, ❤️ ForecastCity English Support Team ❤️
Short
by ForecastCity
4
NZDUSD approaching a buy zoneNZDUSD has been trading within a Channel Down since the start 2021. The RSI on the 1D time-frame has successfully provided very accurate buy signals within a zone that is currently very close to. The price itself is approaching the bottom (Lower Lows trend-line) of this long-term Channel Down and it resembles (also on RSI terms), the July - August bottom fractal, which made its Lower Low after the sell-off of August 17 - 19. Currently we are on an equally bearish streak since the rejection on the 1D MA50 (blue trend-line), which indicates that the pair is close to making a bottom (Lower Low) and start rising towards the Lower Highs (top) trend-line of the Channel. Every rebound to a Lower High reached the middle of the 0.618 - 0.786 Fibonacci retracement zone. Our target on the long-term is 0.7000. -------------------------------------------------------------------------------------------------------- ** Please support this idea with your likes and comments, it is the best way to keep it relevant and support me. ** --------------------------------------------------------------------------------------------------------
Long
by TradingShot
2
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.
Editors' picks
by thunderpips
19
its experimentalnotice!! this is just a testing of a random idea so I can back track it in future, daily open interest of usd nzd is so high, lets see if it effects the market somehow... . . .. . .. . . .. . . . hope you all have great time trading :) remember to like and comment your thought about this idea … do not take this as a signal just use it to improve your sight about the market and for the last thing that I wanna say " you are the only person responsible for your money. don't let others decide about it, you decide ! " much love from Iran...
Short
by alisardari
NZDUSD potential for further uptrend | 18th JanPrice is trading in an ascending channel and is near buy entry level of 0.68559 which is also 127.2% Fibonacci projection and 78.6% Fibonacci retracement . Price can potentially go the take profit level of 0.68559 which is also 78.6% Fibonacci projection . Our bullish bias is supported by the stochastic indicator as it is at support level . 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
Long
by FXCM
NZDUSD potential for further uptrend | 18th JanPrice is trading in an ascending channel and is near buy entry level of 0.68559 which is also 127.2% Fibonacci projection and 78.6% Fibonacci retracement. Price can potentially go the take profit level of 0.68559 which is also 78.6% Fibonacci projection. Our bullish bias is supported by the stochastic indicator as it is at support level. 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
Long
by Rockqet
NZDUSD potential for further uptrend | 17th JanPrice is trading in an ascending channel and near buy entry price of 0.67801 which is 78.6% Fibonacci retracement and 127.2% Fibonacci projection . Price can potentially go to the take profit level of 0.68864 which is 50% Fibonacci retracement . Our bullish bias is supported by the stochastic indicator as is near support level . 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
Long
by FXCM
NZDUSD potential for further uptrend | 17th JanPrice is trading in an ascending channel and near buy entry price of 0.67801 which is 78.6% Fibonacci retracement and 127.2% Fibonacci projection. Price can potentially go to the take profit level of 0.68864 which is 50% Fibonacci retracement. Our bullish bias is supported by the stochastic indicator as is near support level. 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
Long
by Rockqet
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
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