UPDATE: The original Idea(below) did not get any traction.. Resistance in the 0.7200 may stall the rally ahead of potential NZDUSD selling on the approach to the FOMC meeting
Close the Trade at the market (Currently 0.7165) for a tiny gain of 0.0015
Kiwi has some upside.
Background: NZDUSD has made an impressive recovery from its post-Trump victory free-fall. NZDUSD dropped from 0.7402 to 0.6970. between November 8 and November 24. It has since recouped over 50% of those losses and is likely to recoup the rest of them in the coming days.
The recent GlobalDairyTrade auction results were encouraging. The 3.5% price increase was the fourth consecutive rise and more importantly, reportedly in the breakeven range for farmers.
The RBNZ signaled that it had finished easing at its November meeting. RBNZ Governor, Graeme Wheeler seemed cautiously positive in a speech on December 8. The intraday and short term NZDUSD technicals are bullish while prices are above 0.7120. looking for a break of 0.7225 to extend gains to 0.7240 and then 0.7300
The combination of a positive domestic economic outlook, high interest rates and bullish technicals suggests further NZDUSD gains to the pre-election peak.
TRADE IDEA RISKS
A major risk to this trade idea is if next week’s FOMC statement is more hawkish than expected. The ensuing US dollar rally would undermine NZDUSD and trigger the stop. Another risk is that this trade idea is late to the party. NZDUSD has already risen 50% from its recent low. It may be due for a correction which, if it over extends, will trigger the stop.
TRADE IDEA PARAMETERS
BUY NZDUSD: ½ normal position size at market (currently 0.7150) Balance at 0.7120
STOP LOSS: 0.7090, just below the 100-day moving average
TAKE PROFIT: 0.7240
TIME HORIZON 3 days
The intraday NZDUSD technicals are bullish while trading above 0.7120, looking for a break of the recent top at 0.7220 to extend gains to the pre-election peak of 0.7400.
Source: Saxo Bank
NZDUSD daily with 100 day moving average noted
Source: Saxo Bank
I IMPORTANT NOTICE and DISCLAIMER: This publication has been prepared by ONeillFX for informational and marketing purposes only. Opinions, estimates, and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable, but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which ONeillFX, its affiliates or any of their employees incur any responsibility. Neither ONeillFX nor its affiliates accept any liability whatsoever for any loss arising from any use of this information. This publication is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any of the currencies referred to herein, nor shall this publication be construed as an opinion as to whether you should enter any swap or trading strategy involving a swap or any other transaction. The general transaction, financial, educational and market information contained herein is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter a swap or trading strategy involving a swap or any other transaction. You should note that the way you implement any of the strategies set out in this publication may expose you to significant risk and you should carefully consider your ability to bear such risks through consultation with your own independent financial, legal, accounting, tax, and other professional advisors. All ONeillFX products and services are subject to the terms of applicable agreements and local regulations. This publication and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced in whole or in part, or referred to in any manner whatsoever nor may the information, opinions and conclusions contained in it be referred to without the prior express written consent of ONeillFX.