ridethepig | RBNZ To Cut!All eyes on RBNZ tonight, Equities globally are running out of steam and high beta FX looks set to suffer badly... the Governor has been very vocal around negative rates and protection via debt monetisation if necessary. Markets have quite the habit of unpinning Central Bank promises of late by choosing to apply maximum pressure. RBNZ will have to satisfy the following logic with a 15bps cut to seem credible.
On the technical side, a simple breakdown in pure price can be played from the 0.610x handle. I am comfortable going into the meeting short, 0.618x is strong resistance and will keep stops protected, while to the downside 0.600x will serve a suitable initial target.
The risk to the thesis comes from the RBNZ being unable to set the dovish stage correctly at this point in the game, the process of unpinning can be seen from quite a different angle.
Good luck.
