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Sellkiwidollar

SHORT NZDUSD: GOLDMAN SACHS FORECASTS 0.68, 0.64, 0.62 GOLDMAN SACHS EXPECT 3 RBNZ RATE CUTS OF 25BP APIECE IN AUG, NOV AND MAR. In a scheduled "Economic Update" published on Thursday, the RBNZ signalled a significant strengthening in its easing bias, and dovish shift across its views on domestic inflation and domestic/global growth. At the heart of many of these changes is renewed concern about the elevated NZD. In our view, these changes make clear that the RBNZ is positioning for a deeper easing cycle, notwithstanding ongoing risks to financial stability from rising house prices. NZDUSD Targets: - 3 Month: 0.68 - 6 Month: 0.64 - 12 Month 0.62 This is largely inline with my previous posts/ reaffirms my short view of NZD$ - especially with the possibility of 50bps of cuts increasing for this year (GS citing two cuts); Plus I also see increased USD strength over the medium term as rate hike expectations/ implied probabilities ever grow - Fed Funds Futures Opt Implied probs now trade at 19.5% for Sept, 20.8% Nove and 40% for Dec, up from yesterday at 18.8, 20 an 39.8 - the firsk-on bias already started today will likely see these probabilities continue to strengthen until the end of the day. The Probability of 2 hikes this year is also becoming an ever stronger possibility with 2 hikes pricing at 7.5% in Dec - and with July Pricing a hike for the first time since Brexit at 2.4%
Short
by QuantumLogicTrading
2
SELL NZDUSD: EYES ON CPI PRINT 23:45GMT - >0.5%=0.73; <0.4%=0.67Short NZDUSD based on low CPI/ inflation = an RBNZ OCR cut is 90% likely - 105 mins after market open at 23:45GMT NZD releases their June CPI print. - In all RBNZ mandates they reiterate how they consider CPI to be their "main/ sole" target or dictator of the monetary policy they set (check any of their minutes etc). - Their target is 2%, plus recently they announced that they would hold an "emergency"/ brought forward economic assessment (this lead to increased short bets on NZD$ at the back of last week (with NZD$ falling from 0.733 to 0.710) as many speculated that this meant the RBNZ has a heads up on the CPI print - e.g. its bad). - See here for more details on NZD CPI and likelihood of a RBNZ OCR cut: www.bloomberg.com - In simple terms if CPI fails to grow on the quarter for NZD e.g. 0.4% or has in fact fallen e.g. 0.3% or less - it is highly likely that the RBNZ will cut their OCR rate, in order to boost the CPI, which in turn will send NZD$ likely to a terminal rate of 0.67 (could be as much as 0.65), hence why last week we saw shorts increase on the pair as fast money tries to front run the market/ print. Trading Strategy - Short NZD$ if CPI print misses or equals 0.4% - Stagnant/ low Inflation = RBNZ OCR cut likely: 1. Personally I dont have any interest in playing the long kiwi$ side e.g. if the print is higher as; 1) the RBNZ isnt happy with NZD trading so well (due to its deflationairy pressures), so action could come to reduce the NZD. 2) There is approximately 300-400pips of downside from here (at least) if a RBNZ OCR cut comes, whereas a no cut will likely see NZD$ Drift to 0.73 (maybe higher) so the risk:reward complex isn't as attractive to the upside IMO. 2. I will be waiting for the CPI print at 23:45GMT - if it is lower or equal to 0.4% I will Short NZDUSD 2lot@Market price; 0.68TP1 0.67TP2 0.65TP3 . 3. This trade is effectively betting on an RBNZ OCR rate cut; See attached posts for more details but this is already highly likely - and IMO is a definite if CPI is 0.4% (even more so if it is lower). Ideally id love to see 0.3%. - The rate cut is ranked likely if CPI comes in at 0.4% or less because 1) Inflation is the RBNZ key target, so stagnation is what they have to avoid - a rate cut is the likely tool they'll use given they have one of the highest CB rates in the developed world; 2) the NZD dollar is very expensive across the board and the RBNZ have communicated their dismay regarding the strength of the currency (e.g. saying its very strong/ causing disinflationairy pressures) - so a OCR cut is also the likely response if the RBNZ wants to depreciate the NZD dollar against all of its trading partners; 3) An OCR cut will ease any of the Brexit Commonwealth Headwinds that may or may not drift into NZD's economy of negative impact - so as these 3 reasons are compounded I believe an OCR cut is made ever more highly (80-90%) likely thus bearish bets against NZDUSD make sense to me from here. 3. This CPI trade, if comes in on target (0.4% or less), is also good as LDN and NY session's will have 8-14 hours until they start - so you will be able to get ahead of the market/ mostof the largest FX flows. Though the Asia session will be in full swing so dont expect an easy ride - IMO fingers should be on the trigger to execute the short immediately if 0.4% or less is seen - NZDUSD will likely drop 200+pips in less than 30seconds if these figures are the case (if not even quicker). Any questions or comments please ask - reading the "sell nzdusd @0.73 - tp 700pips" post ive attached helps support this short Kiwi$ trade
Short
by QuantumLogicTrading
19
SHORT NZDUSD: +2 STANDARD DEVIATION PIVOT POINT ON DAILY & H1Also as additional technicals to support the short NZD$ view: 1. On the daily, weekly and H1 NU currently Trades (and at 0.73) close/ at to its +2 standard deviation lines, these are highly resistive. - Assuming NU trades mean reverting +2SD means there is a 95% chance of a price reversal/ 95% of all prices should be below the +2SD channel lines (e.g. NU highly likely lower from here). -- And as you can see by the Circle Yellow highlights NU has held this +/- 2SD discipline in the past so is highly likely to maintain these levels in the future. 2. Also NU trades significantly above its 60, 120, and 250 Moving Averages on 1h, 4h, 1D, 1wk - this also signals strong overbought prices, where selling has a higher probability of success. *Be sure to check the attached post "SELL NZDUSD @0.73 - TP 700PIPS: BREXIT, RBNZ, FED & USDJPY HEDGE" for NZDUSD short fundamentals*
Short
by QuantumLogicTrading
7
SELL NZDUSD: +2 STANDARD DEVIATION PIVOT POINT ON DAILY & H1Also as additional technicals to support the short NZD$ view: 1. On the daily, H1 and weekly NU currently Trades (and at 0.73) close/ at to its +2 standard deviation lines, these are highly resistive. - Assuming NU trades mean reverting +2SD means there is a 95% chance of a price reversal/ 95% of all prices should be below the +2SD channel lines (e.g. NU highly likely lower from here). -- And as you can see by the Yellow circle highlights NU has held this +/- 2SD discipline in the past so is highly likely to maintain these levels in the future. 2. Also NU trades significantly above its 60, 120, and 250 Moving Averages on 1h, 4h, 1D, 1wk - this also signals strong overbought prices, where selling has a higher probability of success. *Be sure to check the attached post "SELL NZDUSD @0.73 - TP 700PIPS: BREXIT, RBNZ, FED & USDJPY HEDGE" for NZDUSD short fundamentals*
Short
by QuantumLogicTrading