AUD looks cheap vs NZD=> Here we are looking at AUDNZD to pickup at the lower end of our current channel.
=> The aim here is to trade a break back towards our fair value which is close to 1.10
=> Australia hasn't shown any signs of trade war damage although yields are going to start weighing heavy rather soon and for those reasons would not recommend trading AUDUSD to the buy side(edited)
=> Markets are expecting modest retail sales growth at 0.2%
=> Trade balance is holding due to commodities and weaker export growth... in any case, this is a very technical environment with a strong trade surplus providing the narrative.
=> Risk as proxied by the VIX has been unchanged although we do not expect this to remain the case for much longer as further pressures on EM come via rate differentials.
=> For these reasons NZD will come under further pressure coupled with softening annual GDP growth challenging the RBNZ's outlook for acceleration in the second half of the year.
=> All the best to those trading this one in live or watching from the sidelines...
