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SHORT AUDNZD - STRAT TRADE: 99.5% PROBABILITY OF REVERSALSHORT AUDNZD: 1. Based on the last 16yrs of daily close data (since 01/01/2000 to date) AUDNZD has a cumulative probability of a =>7th day lower at 0.5%, hence there is a implied 99.5% chance of reversal on the daily. 2. Technically there is also some nice structure about the 1.045 level. Trading Strategy: 1. Sell AUDNZD at market in 1xlot, and add 2x on each daily close lower from here. Start in VERY small lots to reduce risk and ensure you can add on adverse moves lower (it could be several days). TP is the next/ First daily close higher. Any questions please ask - also see performance attached of recent trades using the same stats
Short
by QuantumLogicTrading
RBNZ MONETARY POLICY STATEMENT - GBPNZD TACTICAL LONG (NZDUSD)*RBNZ not adding much new in their September statement, and imo, Gov Wheelers speech highlighting the issues with trying to control a ccy with the cash rate makes the persistent worries regarding kiwi/ nzd strength less of a dovish factor than it may appear. Nonetheless, the statement on the margin was neutral, with perhaps the pressure for a lower kiwi and inflation prints putting it on the dovish side. Positioning wise, I am tactically long GBPNZD and EURNZD for another day or two (depending on closes - see attached).. this leaning dovish statement may ease these positions into the money but it isnt the key driver I was looking for but ill take any kiwi weakness we can get here. One onus on short kiwi is the tail off in US STIR which may see some more AUDNZD selling (kiwi buying) as USD rates become less attractive - although we have infact seen December fed funds trade flat on the day (though November did soften from 20 to 14%) so this yield seeking cross selling may be limited and under some sort of control for now which should enable these tactical kiwi shorts some running room. RBNZ: MONETARY POLICY TO REMAIN ACCOMODATIVE - A Decline In THE NZ$ Is Needed - Further Easing Will Be Required - Weak Global Growth And Low Rates Putting Upward Pressure On NZ$ - High NZ$ Makes It Difficult To Reach Inflation Target - Further Declines In Inflation Expectations Still A Risk - Domestic Growth Supported By Strong Migration, Tourism, Construction - Strong Immigration Is Limiting Wages Pressure - Watching Data Closely - Volatility In Global Markets Has Increased - House Price Inflation Remains Excessive, Macropru Having Moderating Influence - Outlook For Global Growth, Commodity Prices Remains Uncertain - Annual CPI Inflation Expected To Weaken In Sept Quarter Full statement is here - www.rbnz.govt.nz WESTPAC ON THE RBNZ: -This morning the RBNZ left the OCR unchanged at 2.00%, as was widely expected. -Much of the language from the August Monetary Policy Statement was retained in today's release, most likely deliberately so. The last paragraph repeated that "further policy easing will be required to ensure that future inflation settles near the middle of the target range" (our emphasis - "will" is about as strong as the RBNZ's language gets). -The statement acknowledged the economic developments since August, without altering its bottom-line assessment on inflation. Dairy prices have risen strongly, although there is still a great deal of uncertainty around the full season outcome; the NZ dollar has risen more than expected; strong GDP growth was broadly in line with expectations; and there are early signs that the latest round of lending restrictions is having a dampening effect on the housing market. -The RBNZ again noted that annual inflation is expected to rise from the end of this year, as some temporary factors drop out. Nevertheless, the RBNZ still faces an uncomfortably slow return to the inflation target, with the risk that persistently low inflation leads to a further decline in wage and price expectations. -In August the RBNZ was fairly explicit that its interest rate projections split the difference between one and two more OCR cuts in coming months, with the first cut most likely to be at the November MPS. -We suspect that the RBNZ is still committed to at least the first of those rate cuts. Any change in the language of today's statement could have given the false impression that the RBNZ was wavering on further easing.
Long
by QuantumLogicTrading
RBNZ MONETARY POLICY STATEMENT - GBPNZD TACTICAL LONG (NZDUSD)RBNZ not adding much new in their September statement, and imo, Gov Wheelers speech highlighting the issues with trying to control a ccy with the cash rate makes the persistent worries regarding kiwi/ nzd strength less of a dovish factor than it may appear. Nonetheless, the statement on the margin was neutral, with perhaps the pressure for a lower kiwi and inflation prints putting it on the dovish side. Positioning wise, I am tactically long GBPNZD and EURNZD for another day or two (depending on closes - see attached).. this leaning dovish statement may ease these positions into the money but it isnt the key driver I was looking for but ill take any kiwi weakness we can get here. One onus on short kiwi is the tail off in US STIR which may see some more AUDNZD selling (kiwi buying) as USD rates become less attractive - although we have infact seen December fed funds trade flat on the day (though November did soften from 20 to 14%) so this yield seeking cross selling may be limited and under some sort of control for now which should enable these tactical kiwi shorts some running room. RBNZ: MONETARY POLICY TO REMAIN ACCOMODATIVE - A Decline In THE NZ$ Is Needed - Further Easing Will Be Required - Weak Global Growth And Low Rates Putting Upward Pressure On NZ$ - High NZ$ Makes It Difficult To Reach Inflation Target - Further Declines In Inflation Expectations Still A Risk - Domestic Growth Supported By Strong Migration, Tourism, Construction - Strong Immigration Is Limiting Wages Pressure - Watching Data Closely - Volatility In Global Markets Has Increased - House Price Inflation Remains Excessive, Macropru Having Moderating Influence - Outlook For Global Growth, Commodity Prices Remains Uncertain - Annual CPI Inflation Expected To Weaken In Sept Quarter Full statement is here - www.rbnz.govt.nz WESTPAC ON THE RBNZ: -This morning the RBNZ left the OCR unchanged at 2.00%, as was widely expected. -Much of the language from the August Monetary Policy Statement was retained in today's release, most likely deliberately so. The last paragraph repeated that "further policy easing will be required to ensure that future inflation settles near the middle of the target range" (our emphasis - "will" is about as strong as the RBNZ's language gets). -The statement acknowledged the economic developments since August, without altering its bottom-line assessment on inflation. Dairy prices have risen strongly, although there is still a great deal of uncertainty around the full season outcome; the NZ dollar has risen more than expected; strong GDP growth was broadly in line with expectations; and there are early signs that the latest round of lending restrictions is having a dampening effect on the housing market. -The RBNZ again noted that annual inflation is expected to rise from the end of this year, as some temporary factors drop out. Nevertheless, the RBNZ still faces an uncomfortably slow return to the inflation target, with the risk that persistently low inflation leads to a further decline in wage and price expectations. -In August the RBNZ was fairly explicit that its interest rate projections split the difference between one and two more OCR cuts in coming months, with the first cut most likely to be at the November MPS. -We suspect that the RBNZ is still committed to at least the first of those rate cuts. Any change in the language of today's statement could have given the false impression that the RBNZ was wavering on further easing.
Long
by QuantumLogicTrading
LONG EURNZD: STRAT TRADE - 99.49% PROBABILITY OF REVERSALLong EURNZD: 1. Based on the last 16yrs of daily close data (since 01/01/2000 to date) EURNZD has a cumulative probability of a =>6th day lower at 0.5%, hence there is a implied 99.5% chance of reversal on the daily. 2. Also we see the Z-Score for, Monthly, 3m and 2wk all above 1SD. 3. Fundamentally I also like being long EUR given the ECBs new more neutral stance where monpol easing looks to be coming to an end. Trading Strategy: 1. Buy EURNZD at market in 1xlot, and add 2x on each daily close lower from here. Start in small lots to reduce risk and ensure you can add on adverse moves lower. TP is the next daily close higher.
Long
by QuantumLogicTrading
6
LONG GBPNZD - STRAT TRADE: 99.01% PROBABILITY OF REVERSALLong GBPNZD: 1. Based on the last 16yrs of daily close data (since 01/01/2000 to date) GBPNZD has a cumulative probability of a =>6th day lower at 0.99%, hence there is a implied 99% chance of reversal on the daily. 2. Also we see the Z-Score for, Monthly, 3m and 2wk all above 1.5SD - with 1m heavily over sold at -2SD. 3. Fundamentally Sterling looks a little over-offered, with the reason for the aggressive move lower uncertain at best imo - whilst today we saw the kiwi/ GDT Price index trade much softer than recent months which is a positive to be short kiwi tactically. Trading Strategy: 1. Buy GBPNZD at market in 1xlot, and add 2x on each daily close lower from here. Start in small lots to reduce risk and ensure you can add on adverse moves lower. TP is the next daily close higher. Any questions please ask!
Long
by QuantumLogicTrading
1
LONG GBPNZD - STRAT TRADE: 99.01% PROBABILITY OF REVERSAL *Long GBPNZD: 1. Based on the last 16yrs of daily close data (since 01/01/2000 to date) GBPNZD has a cumulative probability of a =>6th day lower at 0.99%, hence there is a implied 99% chance of reversal on the daily. 2. Also we see the Z-Score for, Monthly, 3m and 2wk all above 1.5SD - with 1m heavily over sold at -2SD. 3. Fundamentally Sterling looks a little over-offered, with the reason for the aggressive move lower uncertain at best imo - whilst today we saw the kiwi/ GDT Price index trade much softer than recent months which is a positive to be short kiwi tactically. 4. Technically there is also a triple bottom forming at the 1.77 level (previous 2 support lows) which is even more reason to take a long position. Trading Strategy: 1. Buy GBPNZD at market in 1xlot, and add 2x on each daily close lower from here. Start in small lots to reduce risk and ensure you can add on adverse moves lower. TP is the next daily close higher. Any questions please ask!
Long
by QuantumLogicTrading
LONG EURNZD: STRAT TRADE - 99.49% PROBABILITY OF REVERSAL *Long EURNZD: 1. Based on the last 16yrs of daily close data (since 01/01/2000 to date) EURNZD has a cumulative probability of a =>6th day lower at 0.5%, hence there is a implied 99.5% chance of reversal on the daily. 2. Also we see the Z-Score for, Monthly, 3m and 2wk all above 1SD. 3. Fundamentally I also like being long EUR given the ECBs new more neutral stance where monpol easing looks to be coming to an end. 4. Technically there is also some nice structure about the 1.52 level, though not quite yearly lows (as in GBPNZD) but still a firm level which is more likely than not to attract some bids. Trading Strategy: 1. Buy EURNZD at market in 1xlot, and add 2x on each daily close lower from here. Start in small lots to reduce risk and ensure you can add on adverse moves lower. TP is the next daily close higher.
Long
by QuantumLogicTrading
2
SHORT GBPNZD: CARRY TO OUTPERFORM; LOWER BOE EQUILIBRIUM?GBPNZD: 1. Wanted to repost my view on GBPNZD - remain short on rallies here into 1.82 with a 1.80, 200pip target. 2. This whole week weve remained strictly rangebound and sterling kiwi has paid every time (about 10) on shorts at the 1.810 level so i will continue this view at 1.82 given: 1) NZD carry continues to be the highest in G10 so Kiwi demand will likely hold up for the foreseeable future especially on BOE fwd guidance - though UK data outperforming in the near term could continue to put sterling topside pressure though the long game i dont expect this to last. 2) Sterling looks overbrought on the daily at these levels some 400pips higher than BOE monpol lows, here imo is the true home for GBPNZD given I expected the lean for further easing to be on BOE vs RBNZ as kiwi house prices will continue to prevent aggressive easing (as Wheeler pointed out earlier this week - rapid easing isnt going to happen). Risks: 1. Technically, on sterling demand I think risk is to the 1.83 resistance level, I dont think sterlingkiwi has much more given the amount of resistance we have found down at 1.81. 2. AUDNZD Re-balancing - there looks like there may be a AUDNZD rebalancing higher after 2wks of selling, this could shift GBPAUD aussie shorts into kiwi shorts vs GBP, though the AUDNZD movement higher looks to be struggling to gain traction given the differential of 50bps remains the bottom line, and weak fwd guidance from both RBA and RBNZ makes it difficult to differerentite the two (not to mention aussie data has been less firm in recent times vs kiwi). 3. UK PMI - UK PMIs next week, if outperforming will likely give GBP bulls more fuel to own sterling, given it is economic revisions recently higher that has been the fundamental reason for sterling topside - so further leading indications from PMIs could continue this trend, though given the move already higher, 1.82 could be the ceiling here (though watch out for a AUDNZD equilibrium higher which would make gbpnzd move through 1.82). If the PMIs were to show any figure above 50, expect an aggressive 300pip+ movement higher. 4. USD hiking risk - USD strength will cause NZD yield seeking supply as investors shift into USD markets instead.. as we have seen today with the spike higher, continued USD rate performance will drag on NZD longs in the medium term.
Short
by QuantumLogicTrading
SELL GBPAUD: STRAT TRADE - 5 Days up P=98.78% 6TH DAY LOWERGBPAUD: 1. SterlingKiwi has been aggressively bid higher for the last 5-days on the back of sterling data outperforming last week, broad aussie weakness and a general recovery from lows. 2. Statistically, after analysing the last 16.5yrs of data it shows the probability of a 6th day or more of buying is 1.22% which means there is an implied 98.78% chance that we move higher today - I like these odds so will add a short here. - If we were to see another day of buying, a 6th day, then the probability of a 7th day is even better on the sell-side odds of 99.45% so i will add to shorts if this is the case - the max number of buying days in GBPAUD has been 10 once and 9 3 times. 3. Plus aussie 30 bill rates firmed up on monday implying only a 5% chance of a september cut down from 8% of the past week, and sterling OIS rates came off from fridays rally after the market decided to fade last weeks data. - Also we have found some technical price resistance at the 1.72 handle so being short here makes sense. Trading strategy - GBPAUD Sell @1.721: 1. Short GBPAUD pretty much at market TP should be 100pips lower at the 1.711 level. 2. Also check my previous post of short gbpnzd into rallies at 1.81 and GBPUSD into 1.315-32
Short
by QuantumLogicTrading
4
AUDNZD - STAT TRADE: BUY AFTER A 5TH DAY OF SELLING; P=98.7%AUDNZD: 1. Aussie kiwi has been aggressively sold lower for the last 8/9 days, with the bullday being only 4pips higher (pretty much 9 straight days of selling) and most recently the last 4 days have been pure consecutive closes lower. 2. Statistically, after analysing the last 16.5yrs of data it shows the probability of a 5th day or more of selling is 3% which means there is an implied 32/33/ 97% chance that we move higher on the next day, these odds arent too great so I suggust NOT buying on open, instead lets wait and see if we can get another close lower on the daily that takes us into the strong support zone at 1.041/3 - then this will mean buying the probability that a 6th or more day of selling occurs which is 1.3% or an implied chance of 98.7% or 99/100 that the price will go up on the 6th day Trading strategy - AUDNZD wait for monday to close lower at 1.041/3 and buy tuesdays open: 1. I advise buying aussie here after the 5th day lower as the 6th day has a 98.7% chance of moving higher, after a 5th day of selling, the odds are good and I will take part in this.
Long
by QuantumLogicTrading
5
SHORT GBPNZD ON RALLIES INTO 1.81: RBNZ GOV WHEELER HIGHLIGHTSThe market took RBNZ Wheelers comments as largely hawkish before fading off to neutral after interestingly Wheeler mentioned that the current market rate tracker has 35bps of cuts priced in - illuding to 2 more cuts being likely though he failed to mention how realistic this expectation is past what future data holds. I like being short GBPNZD into 1.81 rallies with 100pips tp at 1.80 - the market has remained somewhat capped/ rangebound since the RBNZs decision on the 10th between 1.81-79 and 1.81 has held on a number of occasions on the m30 (about 20) so shorts here look firm and i think will continue to be, especially since the GBP rates spike on friday looks to be tamed with the 1.81 and i expect this to fade throughout th eweek giving more reason than not for gbp downside - especially vs NZD since there isnt any data to get in the way this week and last weeks above average employment report was the last say (along with Wheelers comments now). On a side note and for similar reasons I like to be short gbpusd as Fed Yellens speech is largely likely to be skewed to the hawkish side given the other speakers last week trying to reaffirm the Feds control - though durable and GDP data remains the biggest risk imo - a miss here and cable will likely trade into the 1.33 handle, though i would still maintain my fade on rallies and sell here. RBNZ Gov Wheeler Speech Highlights: -RBNZ GOVERNOR WHEELER SAYS MONETARY POLICY FACES CHALLENGES IN TURBULENT TIMES -RBNZ GOVERNOR WHEELER SAYS SCOPE OF MONETARY POLICY CONSTRAINED BY DEVELOPMENTS OUTSIDE COUNTRIES' BORDERS -RBNZ GOVERNOR WHEELER SAYS CURRENT INTEREST RATE TRACK BALANCES A NUMBER OF RISKS WHILE GENERATING INCREASE IN CPI INFLATION -RBNZ GOVERNOR WHEELER SAYS TWI FX RATE ALREADY AT HIGH LEVEL -RBNZ GOVERNOR WHEELER SAYS FLEXIBLE INFLATION TARGETTING MOST APPROPRIATE FRAMEWORK -RBNZ GOVERNOR WHEELER SAYS CURRENT INTEREST RATE TRACK INVOLVES EXPECTED 35 BASIS POINTS OF CUTS
Short
by QuantumLogicTrading
SELL EUR V AUD, USD, NZD: ECB MONETARY POLICY MINUTES HIGHLIGHTSAfter 5days higher EUR$ Statistically is a 80th percentile sell opportunity - the monetary policy minutes were dovish on the margin reiterating and stressing the ECB's willingness to "Boost stimulus again if needed". This should put downside pressure on EUR given september meeting is coming up (when most likely to add to easing). EURAUD and EURUSD shorts here look technically the best and fundamentally with EURNZD also possible and an alternative for EURAUD (depends on your preference - higher differential = NZD; weaker monpol fwd guidance/ future rate stability = AUD). ECB Monetary Policy Minutes Highlights: ECB SAYS "WIDE AGREEMENT" AMONG COUNCIL MEMBERS NOT TO DISCUSS ANY MONETARY POLICY REACTION AT JULY 20-21 MEETING -Brexit Vote Created New Headwinds for Eurozone Economy, Heightened Uncertainty-ECB Minutes -Brexit Vote Could Affect Global Economy in Unpredictable Ways-ECB Minutes -Policymakers Stressed ECB's Readiness to Boost Stimulus Again if Needed-ECB Minutes -Policymakers Thought it Was Too Soon to Discuss Fresh Stimulus-ECB Minutes -ECB Saw Market Impact of Brexit Vote "Contained"-ECB Minutes -Policymakers Stressed Need To Safeguard Transmission of ECB Policies Through Banks-ECB Minutes -Policymakers Noted Apparent Link Between Bank Stock Prices, Bank Lending Volumes-ECB Minutes ECB ACCOUNT OF MONPOL MEETING -Called For Measures To Address Weak Profitability -No Clear Upward Trend In Inflation Path -Premature To Discuss Fresh Stimulus ECB'S PRAET: CALLS WEAK PRICES AN 'ONGOING SOURCE' OF CONCERN
Short
by QuantumLogicTrading
SHORT GBP VS AUD, NZD, USD: FADE RALLIES - RETAIL SALES BEATRetail sales outperformed on all cylinders today and GBP as expected has rallied into nice shortable levels now - with brexit uncertainty likely to continue to way and continued dovish BOE support also equally weighing on sterling in the future. My preferred shorts immediately are vs USD as i expected Fed Dudley and Williams (speaking today) to talk the extremely battered USD higher (as they did earlier in the week). I also like medium-term (end of next week shorts) vs NZD and AUD as GBPAUD and GBPNZD come into nice resistance at 1.81 and 1.713, after closing two days with both aussie and kiwi weaker i think this third day higher will be the last and thus a high probability opportunity to short GBP - I also like these AUD and NZD longs given the above average employment reports from both NZD and AUD this week which seemingly are yet to be priced vs GBP. Further the medium term view vs AUD and NZD of short GBP derives from the trend - where you can see GBP has lost 1000pips post brexit as the implied interest rate differential between GBP and AUD/ NZD has increased and is projected to increase as BOE ease rates and AUD and NZD rates are likely to remain stable (especially AUD given the SOMP and RBA minutes). Whilst NZD rates remain at the pinnacle of 2% so even if the RBNZ does ease as expected the differential between sterling and kiwi will remain the highest for yield seekers for the next 50bps lower, which is likely to be neutral. Trading strategy - Short GBP vs AUD, NZD, GBP in proportionate SMALL lots and add if higher: 1. Short GBPUSD @1.317 - 1.305/8TP1 1.290TP2 2. Short GBPAUD @1.713 - 1.693TP1 1.673TP2 3. Short GBPNZD @1.81 - 1.7910TP1 1.777TP2 I also like this strategy given the 3-way exposure net hedges any individual cross risk e.g. aud nzd or usd.
Short
by QuantumLogicTrading
2
AUDUSD LONG: RBA GOV STEVENS SPEECH HIGHLIGHTS"It's a search-for-yield world and this country still looks attractive because other yields look so unattractive," Mr. Stevens said in a joint interview with The Wall Street Journal and the Australian newspaper ahead of his retirement next month. "That's not something that the Reserve Bank can wave a wand and make go away." The below and above support my bullish AUD$ view, the RBA/ Gov Stevens seems to have accepted and become contempt somewhat that AUD appreciation will continue in an era of low global interest rates as ive said before/ earlier. I continue to like AUD$ to 0.78 12m highs, on the back of weak US CPI.. USD currently seeing some bids on the back of Fed Dudleys hawkish comments (attached), but i nonetheless think CPI will be the lasting word on the USD front and will help AUD$ bid up to the 0.78 level. USD strength comes as a function of the fed funds futures which are up at 18% probability of a sept hike vs 9% yesterday, though this should be faded into days end as the CPI weakness takes over RBA Gov Stevens Speech Highlights: RBA Gov. Stevens: World Economy Ready for U.S. Rate Rise RBA Gov. Stevens: Stronger GDP Growth Rates Would Be Welcomed RBA Gov. Stevens: Should Be Possible to Expand Budget, Retain AAA-Rating RBA Gov. Stevens: House Prices Must Still Be Watched Carefully RBA Gov. Stevens: Worrying Knowledge Gap Around China Economy RBA Gov. Stevens: Cash Rate Just One Variable for Australian Dollar Level RBA Gov. Stevens: High Yields in Australia in Infrastructure, Property RBA Gov. Stevens: Hard to Wave Away Demand for Australian Dolla RBA Gov. Stevens: Australian Housing Not in Risky Category RBA Gov. Stevens: Housing Debt Is Significant RBA Gov. Stevens: No Fresh Surge in Housing Leverage RBA Gov. Stevens: Housing Slump Would Not Lead to Systemic Risk RBA Gov. Stevens: Housing Slump Would Not Trigger Bank Failures
Long
by QuantumLogicTrading
5
NZDUSD/ AUDUSD: RBNZ GOV WHEELER SPEECH HIGHLIGHTSGovernor of the RBNZ Wheeler offered little bearish pressure on kiwi, refusing to go into any intervention talk and failing to say what the bank will actually use to tame this deflationaire NZD they are experiencing at the moment - with the comments below in mind imo this leaves on direction for Kiwi (short of some FOMC/ USD bullish pressure which seems unlikely as rate expectations continue to be sold-off on the back of a quiet data week) and thats higher - in the speech it became apparent that cutting rates does little to curb kiwi strength given the relative differential remains the highest in G10 in this low interest environment both AUD and NZD rates remain some 50-150bps more attractive for those low risk yield seeking funds. On a break of 0.733 I see NZD$ moving towards 0.76 - though any USD strength could tame the cross, especailly given 60bps of further cuts have been built into the kiwi projections - though given there is 6wks until the next meeting imo there is certainly time for us to move higher before moving lower into the meeting as dovish expectations build as they did before. From here AUD looks more attractive here given their lack of forward guidance, and already breakout levels 0.78 is now the target - USD strength may continue weak given the presidential election.. is it likely the FOMC will hike just before an election e.g. sept or nov? despite their independence this seems unlikely + imo a Dec hike makes the most sense especially as some feds call for some consistency e.g. 12m as it is easier to measure policy transmission this way. One potential downside to this view is USD strength, whilst we seem to be in a wave of relentless selling this could be reversed if it is no election related (though there is little else impetus offered) but nonetheless given AUD's breakout i think the 0.78 target is still fair and given NZDs reaction already - it is unlikely we see sellers from here, this reaction almost mimics the RBA's rate cut reaction e.g. 50pips higher - but that was then followed by 200pips higher 1wk later.. we could certainly be in for the same price action here and this is what my bets are on. RBNZ Gov Wheeler Speech Highlights: -WHEELER: NOT SURPRISED BY NZD MOVE AFTER TODAY'S DECISION -WHEELER: RBNZ HAS BUILT 60BPS OF CUTS INTO PROJECTIONS -WHEELER: NO SERIOUS CONSIDERATIONS OF A 50BPS CUT -RBNZ GOV WHEELER: WOULD LIKE TO SEE MOST OF RATE CUT PASSED ON BY BANKS -WHEELER: THERE IS FLEXIBILITY IN POLICY TARGETS AGREEMENT -WHEELER: WANT NZD TO FALL, WANT TO TAKE PRESSURE OFF NZD WITH LOWER RATES -WHEELER: DEBT TO INCOME TOOL UNLIKELY TO BE IMPLEMENTED THIS YEAR -WHEELER: WAGE MODERATION GREATER THAN RBNZ EXPECTED -WHEELER: RBNZ HAS LIMITED INFLUENCE OVER NZD -WHEELER: WOULD BE CONCERNED IF THERE WAS A FURTHER DROP IN ST INFLATION EXPECTATIONS -WHEELER: WILL LOOK AT NZD REACTION OVER COMING DAYS
Long
by QuantumLogicTrading
1
NZDUSD: RBNZ MONPOL DECISION PREVIEW - BOE OR RBA STYLE?RBNZ Monetary Policy Decision : 1. At 22:00GMT the RBNZ are expected to cut their OCR rate to 2% from 2.25% (25bps), further they will release their monpol statement and rate statement then too - with RBNZ Gov Wheeler speaking 1hr after the release. 2. The are a number of outcomes which are likely to or not to affect the NZD$ market, I will list the combinations below from the very LHS/ Dovish to the more mild and RHS- Combination of outcomes - assuming the 25bps cut is certain as it is priced 100% into kiwi rates markets: 1. LHS NZD$ response fall to 0.690-0.681 - a 50bps rate cut, dovish statements and offering strong easing biased forward guidance e.g. hinting at further cuts likely, possible QE, other alternative measures being taken if kiwi persists strong - and Gov Wheeler Reiterates this dovish and highly committed sentiment in his speech.. - BOE and Gov Carney speech last week is a good illustration of a LHS response, very strong commitment to future easing - despite denying negative rates (housing market sentiment could be the equivalent here) 2. Average NZD$ response fall to 0.710 on the day - a 25bps rate cut, some weak references to future monpol - Wheeler fails to convince the market anything new will be coming 3. RHS NZD$ response = stable at market, then whipsaw higher to 0.73 on the day as investors flock to the highest G10 carry - a 25bps cut, no references to more easing and a theme of conplacency - Wheeler is neutral and perhaps makes mention to the housing environment limiting the RBNZ's hand with future easing. - RBA's rate cut and SOMP last week and Gov Stevens speech yesterday is a good example of a RHS rate cut and neutral statement/ Speech - offering no forward guidance on policy, no hits at future easing conventional or otherwise - where we have seen AUD$ move 200pips higher despite the cut My Opinion on the most likely outcome: 1. Assuming the RBNZ have seen the very bullish AUD reaction to this weeks WEAK rate cut by the RBA/ Stevens (as discussed above) and the RBNZ has also seen the bearish reaction of the market towards BOE/ Carney's reaction to their aggressively dovish statement, speech and policy measures (e.g. cut and 60bn in QE); - And assuming the RBNZ have seen Kiwi's strength (or USD weakness) and the high levels/ bullish sentiment kiwi is going in at into this monpol decision, which is particularly important now since the RBNZ's emergency economic assessment which stated that they didnt appreciate the strong kiwi$ and would like to bring it down. - These two factors in mind, plus the fact kiwi data has remained weak and RBNZ at even 2% after a 25bps cut is still the highest yield currency by a massive 50bps in G10 (AUD at 1.5%), so thinking of these 4 elements which are all very dominant calls for dovish/ 50bps cut policy It makes sense to think that the RBNZ will be skewed to delivering a very dovish/ LHS monpol package and a BOE M. Carney like speech by Gov Wheeler, especially since the House inflation issue has been discussed and macroprudential policies are set to be put in place in september to try and curb this issue where of past this has been a hawkish limitation on the RBNZ's will to be dovish and ease more. - However, guessing central banks this year has been tricky (BOJ in mind) so there is no certainty, and also there are some worrys over the RBNZs ability to cut 50bps at once - despite the need for it as a 25bps cut leaves a 50bps differential between AUD and NZD which will continue to cause deflationairy pressure and bullish NZD as investors flock to kiwi over the close partner Aussie - given this the RBNZ should be even more inclined to cutting the 50bps so that their ccy isnt used as the "carry ccy". There has been several calls by sell-side houses for a 50bps cut, but as above only time will tell.
Short
by QuantumLogicTrading
3
NZDUSD/ AUDUSD: MONETARY POLICY DECISION HIGHLIGHTSRelatively poor delivery from the RBNZ, by the looks of the whipsaw the market wanted/ expected 50bps based on the AUD differential and the RBA rate cut last week 50bps or some alt policy (e.g. QE) seemed like the smart move to make. From here Kiwi and Aussie longs look preferential as the macro environment shifts to a yield seeking stance from monpol trading - 0.782 for AUD and 0.76 for NZD seem the next bull levels. RBNZ unlike RBA offered some promsing forward guidance though e.g. "further policy easing willl be required" and "A decline in the exchange rate is needed" and "high NZD is causing negative inflation in tradables sector" and "Low global rates are placing upward pressure on the kiwi dollar" - all of which comments point to the RBNZ issuing more dovish easing but it does also ponder the question that given they knew this before making the decision why they didnt execute some of the "further policy easing" and "monpol will continue to be accommodative" which will be required in the future now, to have a greater effect vs just a 25bps cut which the market had already digested weeks ago. The RBNZ also interestingly referenced the low global rates environment causing NZD strength through carrry/ hot money flows - which once again begs the question if the RBNZ know that their rate is the leading rate in G10 by 50-150bps, why did they only cut 25bps as a 25bps cut still keeps NZD as the headline ccy for carry and will likely continue to attract hot money flows unless investors are scared by aggressive future policy - which is now in the hands of Gov Wheeler to project the aggressiveness (or not) of the RBNZ to combat the rate differential and consequently bring the NZD down where they feel it is acceptable. Imo given the markets reaction alot is riding on Gov Wheelers speech in 35mins - he needs to be VERY dovish in his forward guidance rhetoric and offer certainties that make kiwi seem less stable than AUD in the future and thus send the hot money flows into AUD and in order to tame kiwi below 0.73, otherwise we will likely see a replication of the AUD case where we moved 100pips+ on the day despite a cut and SOMP and Gov Stevens speech. From here we wait for the speech. If the speech fails to tame kiwi, i suggest buying kiwi as it is likely to outperform given the lack of easing vs expectations/ what is needed to move NZD lower. Further AUD longs are also advised in this carry seeking macro environment - a Dovish RBNZ makes AUD more attractive but even a neutral RBNZ should help AUD also as it puts less pressure on the RBA to ease since the rate differential between their biggest partner is large enough and still in their favour for kiwi buying for aussie. Nonetheless at these technical levels i like AUD to 0.78 and kiwi to 0.76 if we break 0.734 and Wheeler isnt specific/ aggressive with the forward guidance + the USD weakness is likely to last this week with 0 data coming out so longs make even more sense if only short term RBNZ Monetary Policy Decision Highlights: RBNZ: Risk of Further Declines in Inflation Expectations RBNZ Says Further Policy Easing Will Be Required RBNZ: House Price Inflation Adding To Financial Stability Concerns RBNZ: Monetary Policy Will Continue To Be Accommodative New Zealand Dollar Rises After RBNZ Cut To US$0.7315 RBNZ: A Decline In Exchange Rate is Needed RBNZ: House Price Inflation Remains Excessive RBNZ:Lower Dairy Prices Depressing Farm Sector Incomes RBNZ:Domestic Growth Supported By Inward Migration, Construction, Tourism RBNZ: Low Global Rates Placing Upward Pressure On NZ Dollar RBNZ: Trade Weighted Index Signficantly Higher Than Assumed in June MPS RBNZ: High NZ Dollar Causing Negative Inflation in Tradables Sector NZ Central Bank Sees 90-Day Bank Bill at 2.1% in 4Q 2016 vs Prior 2.2% NZ Central Bank Sees 90-Day Bank Bill at 1.8 % in 2Q 2017 vs Prior 2.1%
by QuantumLogicTrading
NZDUSD: TECHNICAL ANALYSIS - TARGET 0.701 BUT USD WEAKNESS?NZD$ Technical Analysis: Moving Average/ fair price gauge: 1. Kiwi looks rich here at the lower 0.72 level which, significantly above the 3m and 12m which sit at 0.703 and 0.690 respestively, whilst the 1 trades at 0.711. - However, going into RBNZ where they are expected to be dovish (discussed in detail in attached post), these MA levels fall nicely in line with areas of price action suppport and thus will be used as profit targets - thus 0.711, 0.701 and 0.691 are my TP1 TP2 and TP3 levels however, given the bearish bias >50% of my lots will be squared at between the 0.701 and the 0.61 level. The 0.711 level is an intermediate TP, which is better suited for 0.718 shorts vs the 0.722 shorts that i currently hold. 0.691 is possible but is skewed towards the bottom of the range, with 0.681 at the very LHS - a 50bps cut and strong dovish forward guidance e.g. like BOE will likely offer us here - cable managed to fall some 350-400pips which ceteris paribus takes kiwi into the 0.681 level also. Volatility 1. Realised vol has contracted aggressively in the last few days as the daily ranges have tightened unsurprisingly going into RBNZ - IV on the other hand also unsurprisingly has traded bid as option positioning increases as investors place bets on RBNZ. - Net bets to date look to be bearish, with current 25d risk reversals skewed to the downside at -2.6vols, and across the view we observe a -0.5 to -1 downside bias reflecting the expected RBNZ dovish pressure expected. - 50d ATM vols trade currently at 30%, 14.8% 1wks, 12.3% 2wks and 11.3% 1m - clearly the RBNZ and following speakers are steepening the vols here. Though interestingly past current and 1wks, 2wk and 1m IVs are flatter than RV, indicating the market expects kiwi price action to settle after the next week which could mean we see NZD$ move post RBNZ then stabalise at this level vs obseriving continued seesaw action of the past 6wks e.g. 0.70-3 ranging. - Interestingly RV has developed a 60-80% correlated pattern of aggressive/ volatile price action emerging AFTER RV reaching the 5.0-5.5 level (current levels) so assuming my/ markets RBNZ forecasts are correct one would expect this move to be lower (ive highlighted these moves). Standard Deviation: 1. On the daily weve seen SD normalise from the previous levels where kiwi tested the +2 levels after realising these upper 0.72 levels for a sustained amount of time now - hence NZD$ trades at pretty normal levels for the linear regression though an uptrend as now formed vs sideways/ flat being the previous trend. However, I am betting on the RBNZ offering kiwi lower and realising some days below the 0.70 which should see the kiwi trade at 0.70 as an average price at years end - assuming the RBNZ has seen RBA and BOE (and the difference in response and will use this to make their policy effective).
Short
by QuantumLogicTrading
GBPNZD: Uptrend continuationWe're long GBPNZD from 1.8431, with stops at 1.82598. In related ideas you can see my long term NZDUSD analysis, which makes me think this pair is due to embark in a lengthy daily/weekly uptrend soon. After the first push, a pullback came and has given great opportunity to enter longs. We now have to break the blue box resistance up, and trade comfortably higher and/or expand the daily range from this zone, upwards. If not in, you can risk a long with stops at 1.8423, and target the level on chart. Check out my updated track record here: pastebin.com If interested in my real time whatsapp alerts and swing trading newsletter, or in personal tuition, contact me privately. I'm offering a considerable discount on a packaged course which includes access to my private trading signals list for a year. Cheers! Ivan Labrie Link to Tim West's chatroom: www.tradingview.com We discuss setups like this often there. Feel free to stop by and subscribe to his indicator pack. If you have any questions ask. Risk disclaimer: My analysis is provided as general market commentary and does not constitute investment advice. I will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Long
by IvanLabrie
NZD trade weighted index: Short NZD against strong currenciesNZD is a short against its main trading partners. The uptrend in this biweekly chart exceeded the target and ran right into the previous downtrend mode, so it'll naturally come back down to the uptrend mode at the very least. Look for prolonged weakness in NZD crosses, and exploit it. Thank me later... Check out my updated track record here: pastebin.com If interested in my real time whatsapp alerts and swing trading newsletter, or in personal tuition, contact me privately. I'm offering a considerable discount on a packaged course which includes access to my private trading signals list for a year. Cheers! Ivan Labrie Link to Tim West's chatroom: www.tradingview.com We discuss setups like this often there. Feel free to stop by and subscribe to his indicator pack. If you have any questions ask. Risk disclaimer: My analysis is provided as general market commentary and does not constitute investment advice. I will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Short
by IvanLabrie
BUY USD VS AUD, NZD & GBP: FOMC MEMBER KAPLAN SPEECH HIGHLIGHTSMore of the same here - my USD view remains bullish against AUD, NZD, GBP from here and at these levels. Especially on the back of the RBA i still think we should see 0.745 in AUD$ today, 0.69 in kiwi on the 10th (RBNZ), and 1.28 for GBP on the 4th (BOE) Fed Kaplan Speech Comments: Kaplan: Expects Continued Oil Price Volatility Until Year-End Kaplan: 1Q, 2Q GDP Figures Were Disappointing Kaplan Expects to See More Bankruptcies, M&A and Restructuring In Energy Sector This Year DJ News Kaplan: Dallas Fed Still Expects Full Year GDP of 2% Due to Solid Consumer Demand Kaplan: 1Q, 2Q GDP Figures Were Disappointing Kaplan: Dallas Fed Still Expects Full Year GDP of 2% Due to Solid Consumer Demand Kaplan: Dallas Fed Expects Workforce Participation Rate To Go Down to 61% by 2024 Kaplan: Has Confidence Headline Inflation Will Reach 2% In The Medium Term Kaplan: China Future GDP Growth Rates Likely to Decline Kaplan: Brexit Impacts Will Take Time to Unfold Kaplan: Removal of Accomodation Should Be Done in 'Gradual and Patient Manner' Kaplan: There Has Been Significant Decline in Neutral Rate Of Interest Last Few Years Kaplan: Expects to see one hike this year Kaplan: Decline in Neutral Rates Makes Using Monetary Policy More Challenging Kaplan: Structural Reforms, Fiscal Policy Should Be Used to Help Economies
TVC:DXYLong
by QuantumLogicTrading