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NZDJPY Swing trade that you can take now + Fundamental Drivers Hello Traders! We approached a significant support area and having a strong fundamental and seasonal upside bias for the New Zealand Dollar against the Japanese Yen. Enter at market is possible manage risk below the support area. Fundamental Drivers: New Zealand Dollar (NZD) Fundamental Bias: Bullish 1. The Monetary Policy outlook for the RBNZ: At their Oct meeting, the RBNZ delivered on expectations to raise the OCR to 0.50%. As the hike was already fully priced, the lack of new hawkish tones we saw a textbook buy-the-rumour-sell-the-fact reaction in the NZD pushing lower. There was additional focus on the RBNZ expecting headline CPI to climb above 4 percent in the near term, but the most important part of the statement was the subsequent comment that the bank still sees CPI returning towards the 2 percent midpoint over the medium term and that ‘the current COVID-19-related restrictions have not materially changed the medium-term outlook for inflation and employment since the August Statement’. Thus, despite recent covid concerns, inflation concerns and energy concerns, that part of the statement acknowledged that nothing has changed in terms of the bank’s OCR projections released at the August meeting. Unsurprisingly, the bank also stated that their future rate path is contingent on the medium-term outlook for inflation and employment, which means keeping close tabs on incoming data and the virus situation will remain a key focus for us in the weeks and months ahead. With the bank now being the first to hike rates among the major central banks and sitting on the highest cash rate among the majors, and with an OCR projection that is still head and shoulders above the rest, the bias for the NZD remains firmly titled to the upside, and as rates keeps rising, the currency’s carry attractiveness will be a key focus point for the NZD in the months ahead. 2. Developments surrounding the 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 NZD 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 3. Economic and health developments: Virus cases can still have an impact on NZD sentiment, which means the fact that NZ virus cases is at record high levels is something to pay attention to. For now, it’s had very limited impact on the NZD due to the NZ government abandoning their covid-zero strategy and since virus risks have been downplayed by the RBNZ, but further escalation leading to more lockdowns will be important to keep on the radar. 4. CFTC analysis Latest CFTC data showed a positioning change of +4955 with a net non-commercial position of +13861. The NZD reflects net-long positioning for both large speculators as well as leveraged funds but are nowhere near stress levels right now. With the NZD now sitting on the highest cash rate among the major economies and with expectations of that to continue to rise we think carry attractiveness will become a key focus point for the NZD in the months ahead and should mean a favourable upside bias for the NZD against the low yielders like JPY and CHF. In the short- term though, as we mentioned above, the virus situation could see some of the recent upside given back, and also keep overall risk sentiment in mind which saw the NZD failing to benefit from the stellar quarterly jobs data released last week. Japanese Yen (JPY) Fundamental Bias: Bearish 1. Safe-haven status and overall risk outlook As a safe-haven currency, the market's risk outlook is the primary driver of JPY. Economic data rarely proves market moving; and although monetary policy expectations can prove highly market-moving in the short-term, safe-haven flows are typically the more dominant factor. The market's overall risk tone has improved considerably following the pandemic with good news about successful vaccinations, and ongoing monetary and fiscal policy support paved the way for markets to expect a robust global economic recovery. Of course, there remains many uncertainties and many countries are continuing to fight virus waves, but as a whole the outlook has kept on improving over the past couple of months, which would expect safe-haven demand to diminish and result in a bearish outlook for the JPY. 2. Low-yielding currency with inverse correlation to US10Y As a low yielding currency, the JPY usually shares an inverse correlation to strong moves in yield differentials, more specifically in strong moves in US10Y. However, like most correlations, the strength of the inverse correlation between the JPY and US10Y is not perfect and will ebb and flow depending on the type of market environment from a risk and cycle point of view. With bond yields looking a bit stretched at the current levels any decent mean reversion is expected to be supportive for the JPY, so it remains a key asset class to keep track. 3. CFTC Analysis Latest CFTC data showed a positioning change of -588 with a net non-commercial position of -107624. The past few weeks of price action in the JPY was mostly driven by the excessive moves we saw in yields on the US side but was also exacerbated by risk on flows and rising oil prices which is a negative driver for Japan for its terms of trade. Even though the bias for the JPY remains firmly tilted to the downside, the moves across JPY pairs is arguably still looking stretched, and with both large speculators and leveraged funds firmly in net-short territory the odds of some mean reversion has increased. We would prefer waiting for some of the froth to mean revert before looking for new JPY shorts. As always, any major risk off flows can still support the JPY, especially with quite a sizable net-short position still built up in the currency for large speculators as well as leveraged funds, but rates have been the key driver in the short-term. The recent violent repricing in bond markets saw a huge push lower in yields that has supported the JPY, if that continues and we also see some risk off tones keep the stretched positioning in mind as it could see a big unwind if conditions align correctly. Have a great weekend! Regards, Vitez
Long
by Vitezabraham
Has the time arrived for KIWI to appreciate VS other currencies?NZDUSD has already broken out fairly well out of its descending trendline and currently due to USD strength, it has fallen this week to around 70 cents. This fall offers a great opportunity to trade this pair LONG as the RISK TO REWARD RATIO is highly feasible TECHNICAL ANALYSIS 1. PRICE BROKE OUT OF A STRONG RELIABLE DESCENDING TRENDLINE ON BOTH DAILY AND WEEKLY CHARTS 2. PRICE ALSO BROKE HIGHER HIGH IN THE PROCESS AND NOW THE NEXT RELEVANT TARGET IS SEEN AT ANOTHER HIGHER HIGH (0.73100) 3. ASCENDING TRENDLINE ACTING AS STRONG SUPPORT TOGETHER WITH MONTHLY CONCRETE SUPPORT AT 0.7000 FUNDAMENTAL ANALYSIS ON WHY NZDUSD WILL LIKELY RISE 1. The improving conditions follow the rollback of Covid restrictions across much of the Kiwi economy. 2. New Zealand’s performance of manufacturing index (BNZ) crossed the wires this morning at 54.3 for October. That is an increase from the upwardly revised September figure of 51.6. 3. The Reserve Bank of New Zealand has plenty of ammunition to continue down the path of hiking rates, unlike its cross-Tasman counterpart, the RBA. This gives the New Zealand Dollar a comparative advantage versus the Australian Dollar. NZD rate hike bets have increased in recent weeks while the currency’s performance has lagged against the Greenback. That opens the door for a break higher in NZD/USD on the next bout of USD weakness. TO CONCLUDE Based on both technical and fundamental analysis of the current market picture, we can expect NZD to appreciate against many currencies including the USD.
Long
by FX618Analysis
AUD/NZD Signal - NZD Manufacturing Sales - 8 Sep 2021AUDNZD is trending to the downside prior to the NZD Manufacturing sales data, which are changes in the volume of the physical output of the nation's factories, mines and utilities. Technically the pair has broken a key support pivot and is now capped by the pivot as resistance, and the RSI is holding at negative levels. We are targeting the 161.8% fibonacci extension at the 1.0340 level. The RBA has announced rate hikes are not likely until 2024, whereas the RBNZ expects to hike rates later this year.
Short
by ToniSignals
AUD Versus NZD: A Fundamental Outlook and TradeFundamentals: It has been a hawkish month for the Reserve Bank of Australia. The recent meeting suggests that their guidance ramps up into a more hawkish tone. Both monetary and fiscal policies are aussie positive, so far. One thing I keep in mind is their fiscal policy in response to the current covid-19 lockdowns. I believe that the Reserve Bank of New Zealand is overly hawkish, given their currency price. For the next few weeks, the AUD currency give us a more underdog positioning to exploit versus the NZD currency. Technicals: (1) Monthly support (2) 61.8% fib (3) Oversold indicators (4) Divergence (5) RSI at extreme levels Daily: Weekly:
Long
by Rocketman
NZD/USD - Double Blow Piles Pressure on Range SupportTwo months of consolidation has made things a little dull for the NZD/USD pair and that looked to be coming to an end until a new Covid outbreak brought everything to a halt. The delta strain has many concerned and New Zealand has taken a tough stance since the start of the pandemic - successfully so - which makes the decision far from surprising. What may have come as a surprise was the RBNZ decision to grind its tightening cycle to a corresponding halt before it's even started. While conditions for a hike remain, the RBNZ is in no rush to raise rates during this period of uncertainty. At least one more hike this year is the aim, with rates rising to 2% next year. Of course, Covid will have a big say in whether the central bank can deliver on this. With the country in lockdown and central bank not hiking, it's no surprise we didn't see a break of 0.71 that could have led to further gains as the RBNZ led the G10 in tightening monetary policy. Instead it's 0.69 that looks vulnerable and, in fact, we're currently trading just below here. A look at the 4-hour chart MACD and stochastic suggests there isn't much downside momentum at these levels, which given their significance as support, isn't a good sign. Of course, the flip side is that if we can see a significant breakout, it will carry the surprise factor and likely trigger a lot of stops, exacerbating any initial move. Instead, the pair looks more likely to continue to range trade for now and we're left to assess the threat of the latest breakout and whether the lockdown will be brief, as planned. At which point, the rate hike odds will likely increase and NZD should see support once more.
by OANDA
NZDUSD May Be On The Move After RBNZ Keeps Rates SteadyThe left daily chart shows the NZDUSD pair in the weak area, with the Bollingers starting to expand. This, after the RBNZ kept rates steady at 0.25% (market forecast was for a hike of 25bps). The right hourly chart shows the EMA in bearish formation, with the faster green below the slower orange. Moreover, there is angle and separation which denotes momentum. The stochastic has turned negative too. For, the momentum to continue, we are looking for stochastic to move below 20 and hold (blue arrow). If it is able to do this, an underlying momentum push may be present. We do note that the FOMC meeting minutes are due for release at 6:00 pm GMT, which may affect dollar pairings. Trend following indicators may be useful in this case as a potential exit tool. Stop above hourly resistance in conjunction with risk management techniques.
Short
by FXCM
U-Turn In Rate Hike Decision (18 August 2021)The last-minute decision. During their monetary policy meeting earlier today, the Reserve Bank of New Zealand (RBNZ) carried out a last-minute change in decision, holding its overnight cash rate unchanged at 0.25%. New COVID case in six months thwarted RBNZ’s rate hike plan. Just yesterday, the first local COVID case was reported in New Zealand in six months. As a result, Prime Minister Jacinda Ardern announced a nationwide level-four lockdown with immediate effect. Prior to this new COVID case, the RBNZ was expected to announce a rate hike during today’s meeting as the country’s economic recovery has been robust and the economy is starting to overheat. In the released rate statement, the central bank mentioned that the “ Committee discussed the merits of an increase in the OCR at this meeting and considered the implications of alternative sequencing of OCR changes over time ”. However, with what went down yesterday, the central bank decided to put on hold their rate hike decision, highlighting in the rate statement that the “ decision was made in the context of the Government’s imposition of Level 4 COVID restrictions on activity across New Zealand ”. A delay rather than a setback. New Zealand’s “go hard, go early” approach to the containment of the pandemic has been highly effective as is evident from being one of the first few countries to declare COVID-19 free. With the country’s snap lockdown and effective approach, it is possible that the spread of the virus will be contained within a short period of time and is unlikely going to pose a setback to the country. Moreover, the RBNZ has carried forward their expectation of a rate hike from September 2022 to this coming December as indicated in the quarterly monetary policy statement, delivering a hawkish tone. To conclude, this sudden turn of events is unlikely going to hold the New Zealand economy down for long. As the next monetary policy meeting will be held on 6 October, this will give the central bank sufficient time to make a hawkish return, with the condition that the virus is once again contained swiftly.
by GH_Lee
RBNZ rate decision setup for NZDUSDNext week marks a rate decision event for RBNZ. Currently at 0.25%, there is news in the air for an increase in the rate by 25bp, and possibly another hike before the end of this year. Currently NZDUSD has been flowing more or less in the indicated upward channel. It has fallen due to a strong USD this week and a reversal is in the making. Two highlight points on the chart indicate 1. a slight drop in US retail sales and 2. the RBNZ rate announcement. Provided these events fall in support of the Kiwi, it is expected to bounce up and test the 0.7100 range and possibly further. Point to note: currently the 4h signal shows the reverse from this week's downtrend has already started - however its a Friday!!! I feel like jumping on to the long already but may be worth waiting till NY open or London close to understand the levels better. There's a chance we lose pips on the entry but its a safer play. A well-placed stop may benefit the early birds. See ref. think.ing.com.
Long
by sidnir
AUD/NZD May Extend Losses After RBNZ and New Zealand CPI DataThe recent slightly hawkish RBNZ rate decision and better-than-expected New Zealand second-quarter inflation data is driving local front-end government bond yields higher, especially relative to Australia. AUD/NZD has thus been aiming lower these past few weeks and may continue to do so as it capitalizes on the RBNZ's more hawkish shift compared to the RBA. But, key support remains in focus at 1.0601, which is the May low. Clearing this point exposes the 1.0541 - 1.0564 zone. A bearish crossover between the 20-day and 50-day Simple Moving Averages hints at a near-term downward bias. In the event of a material turn higher, keep an eye on potential falling resistance from March. FX_IDC:AUDNZD
by QM_Dubrovsky
NZDUSD confirms falling wedge bullish formation on RBNZ moveNZDUSD registers the strongest intraday gains in three months after the Reserve Bank of New Zealand (RBNZ) announced plans to tapering bond purchases from late July. The kiwi pair’s ability to confirm bullish chart pattern, falling wedge, as well as a sustained break of 100-SMA, also back the buyers to aim for a 13-day-old horizontal resistance near 0.7095. However, the quote’s further upside needs a daily closing beyond the 0.7100 threshold to aim for early June’s low surrounding 0.7125. Meanwhile, 100-SMA and the upper line of the stated wedge, respectively around 0.7010 and 0.6990, could challenge the kiwi pair’s pullback moves. In a case where the NZDUSD prices stabilize below 0.6990, a downward sloping support line near 0.6910 and the 0.6900 round figure may entertain the bears before directing them to the September 2020 tops near 0.6800. Overall, RBNZ’s ability to join the BOC signals further upside for the NZDUSD.
Long
by MTradingGlobal
ridethepig | NZD for the Yearly Close📌 @ridethepig G10 FX Market Commentary - NZD for the Yearly Close Here we are tracking the weak points in the structure which are strategically important points in every map. They are usually protected and once broken and be rewarding with non-stop moves. The handle to track here is 0.74xx which is well placed and comes to undertaking other duties of preventing the flow back towards 0.883x. Now the early strength of this can be seen with the latest breakup, it is a monthly closing in drastic fashion - a veteran soldier ready to march. A breakdown in Dollar for 2021 is a 'good deed' for the rest of the world but actually we will cover a whole chapter around how it is the only monetary option. After a Biden victory we can expect them to rush through a digital dollar and trigger defaults, things will develop quickly so time to start paying attention for the 2021 flows now. Thanks as usual for keeping the feedback coming 👍 or 👎
Long
by ridethepig
3
Expecting AUDNZD to drift towards 1.04 in the coming months- INGING discussed its expectations for the NZD, RBNZ and AUDNZD in a recent note to clients. RBNZ delivers a surprising hawkish signal The RBNZ announced monetary policy overnight, leaving rates at 0.25% and both its NZ$ 100bn asset purchase programme and the Funding for Lending facility unchanged. Markets had probably built up some expectations that the Bank would start to talk tapering due to bond lower issuance, although no strong direction was given in that sense. All the surprises came from the monetary policy statement, where the Bank published its updated projection for some key economic indicators. For the first time in a year, the RBNZ published the projected path for the OCR (the Bank’s policy rate). A market largely positioned for no change in rates until 2023 was taken off guard by forecasts of a rate hike in the second half of 2022. Investors have moved to price in monetary tightening after the meeting, and the swap market is now pricing in around two 25bp rate hikes by the end of 2022. An upbeat tone on the economic recovery RBNZ Governor Adrian Orr made clear that any projection or forward guidance remains heavily dependent on the path of the economic recovery in New Zealand, which is still highly uncertain. At the same time, the set of economic projections pointed to a clearly improved outlook for the economic recovery. Growth projections for early 2022 were upgraded, with a strong rebound expected for 1Q22 next year (+3.4% year-on-year) after the 0.6% contraction registered in 1Q21, while a stronger expected performance in 4Q21 (1.9%) caused a revision of end-2022 forecasts to 3.5% from 3.7%. Inflation and employment were, however, the two most interesting projections to watch on the economic side. After having consistently overestimated the unemployment rate over the past year, the RBNZ finally erased any temporary jump above 5.0%, with the rate now forecast to decline steadily from the current 4.7% to 4.4% in 2023. Upgraded employment and inflation forecasts A hawkish signal was also sent through the inflation projections, with a revision higher to the headline CPI for 2022 and 2023 of around 0.2%, and the Bank now expecting to achieve a stable 2.2% level in early 2023. The mid-point of the Bank’s target range is 2.0%. Border policy and house prices remain in focus In the policy statement, the Bank highlighted concerns about the tourism sector, whose recovery remains tied to the timeline for a reopening of New Zealand borders. The government has so far said that strict border rules will remain in place until the local population has been vaccinated, although a travel bubble with Australia might have signalled a somewhat less strict approach is on the way. Housing remains a key factor, and it is likely that the hawkish turn is partly motivated by the will to assist the government’s efforts to curb surging house prices in New Zealand. Only 20 days ago, the RBNZ published a note titled: “Why the Reserve Bank is concerned about New Zealand's rising house prices”. Despite having steered away from admitting that housing is now an important input in monetary policy decisions (remember that the NZ government changed the RBNZ remit to include housing considerations), it is hard to imagine government measures being able to counter house inflation on their own while rates remain exceptionally low. Moving forward, the dynamics in house prices will be watched carefully by the market, and any signs that the government’s measures are not enough to curb the housing bubble may well prompt markets to price in an even earlier rate hike by the RBNZ. In April, house prices grew at a slower pace, but still around 19% YoY. NZD: Attractive rate profile to provide extended support While little mention was made about the prospect of tapering, it was highlighted that the Bank will likely fall short of completing all NZ$ 100bn worth of purchases under its quantitative easing programme by June 2022. The RBNZ mentioned lower bond issuance by the government as a key reason, although the 100bn target appeared to be hard to reach regardless of issuance. So far, only around NZ$ 50bn worth of government bonds have been purchased under the programme. We think the next step from the RBNZ will be to start talking tapering. Regardless of whether this will ultimately be a monetary policy related move, we are inclined to think the bank will continue to stress this is due to reduced bond issuance, in an attempt to avoid the unwanted consequences (like a stronger NZD) of sounding too hawkish. In the 2020 Budget (as shown in the chart above), the Treasury revised lower its bond issuance forecasts for 2023 and 2024, after having already cut its forecasts for the period 2022-2025 in the December half-year review. At this point, we could start hearing discussions about ending the asset purchase programme earlier and/or reducing its size. Any tapering signal should not come as a major surprise for markets after the hawkish bias was put in place via the forward guidance tool, but it may all the same continue to support rate expectations. From an FX perspective, we suspect that the jump in NZD seen in the aftermath of the meeting may be the start of a broader cycle of appreciation. With the RBNZ now having joined the likes of the Bank of Canada and Norway’s Norges Bank in the group of hawkish central banks in the G10, NZD is set to reap the benefits of an improved rate profile. Hawkish pricing set to support NZD With inflationary pressures eroding the real rate attractiveness across developed countries, we continue to expect markets to reward those currencies that can count on more orthodox (i.e. less dovish) domestic monetary policy. It is worth noting that the relatively low inflation in New Zealand (1.5%) compared to the likes of Canada (3.4%) or Norway (3.0%), makes NZD even attractive than CAD and NOK from a real rate perspective. We think the RBNZ policy divergence with the Fed (which we expect to stay dovish for longer) is likely to keep generating upward pressure on NZD/USD, pushing it above 0.75 this summer. We also see risks tilted to the upside compared to our latest NZD/USD year-end forecasts of 0.77, as long as our bearish USD view for 2022 materialises. There is a possibility that the RBNZ's hawkish shift may prompt the Reserve Bank of Australia to follow with a less dovish tone. However, the policy divergence between New Zealand and Australia is set to stay in place for longer (Australia’s policy rate is already lower, at 0.10%) and we expect this to keep putting pressure on AUD/NZD, which may drift towards 1.04 in the coming months.
by thunderpips
New Zealand Dollar: NZD/JPY May Rise Post RBNZ, Triangle Break?The New Zealand Dollar may rise in the aftermath of the RBNZ rate decision, where the central bank offered hints at a rate hike during the second half of 2022. It could capitalize particularly against the Japanese Yen, where the BoJ may remain more dovish in the long run. NZD/JPY is attempting to break above an Ascending Triangle, where confirming the breakout could open the door to resuming the dominant uptrend towards peaks from 2018 and 2017. Still, a key risk to the downside could be a material shift in market sentiment that fuels demand for the haven-linked Yen. But, ongoing easing and hesitation to taper from the Fed could keep market sentiment rosy for the time being. Negative RSI divergence does warn that upside momentum is fading, which can at times precede a turn lower. In the event of a drop, keep a close eye on the floor of the triangle as well as the 100-day SMA. These may reinstate the focus to the upside as key support. FX_IDC:NZDJPY
by QM_Dubrovsky
NZDJPY Short off Retest of Trend LineIf you follow me on various social media, you know I have been long in general on the NZD. However, we have a super solid short entry here. Let's take a look. On the 4H chart, we can see a trend line that has held for a few months, since March 21st. This is a relatively solid trend line, as it has been respected 5 times. A few days ago we firmly broke that trend line to the downside. At this point, I put this pair in my watchlist to wait for a retest. And sure enough, we're getting one. Here's the 4H chart below. Keep in mind that at the time of this writing, there are still two hours left in this candle. Now, let's take a look at the 1H chart. The big green candle shows price accelerated into the retest line. However, it was met with a doji, followed by two very bearish candles. Both red candles have long upper wicks (as does the doji) and closed significantly lower. This is a good sign that a reversal is happening. So, let's enter! I will be entering with 2% risk. However, the RBNZ statement is tonight. If we have not hit TP1 by the time the RBNZ nears, I will likely close half of my position and move stop to entry, and get rid of my TP1. Hopefully we can gather some pips to be in a good position before the RBNZ statement and presser. I am in short at 78.755 with: Stop at 79 TP1 at 78.5 (where I will close half of my position and move stop to entry) Limit at 78 Risk of 2%
Short
by MRobertsTrading
ridethepig | NZD for FED📌 ridethepig | NZD Market Commentary 27.01.2021 What is in play here? Buyers depriving shorts of their rewards and not allowing the breakdown ahead of Fed. Strategically speaking, this looks and smells a lot like a slingshot. The strong rejection points towards the Kiwi inflows after RBNZ let slip that rate cuts are unlikely. On the Fed side, dollar devaluation is still the name of the game and a dovish Powell is already widely expected. Not expecting much positivity on the recovery front, positioning is the main factor in play here and a sweep of the highs would be healthy as is the case for EURUSD. Thanks as usual for keeping the feedback coming 👍 or 👎
Long
by ridethepig
4