2 Jul 2015
AUD/NZD: Techs, funda align for a test of 1.1575/1600
FXStreet (Bali) - Volatility in the Kiwi market continues at healthy levels, with moves still being a one-way street against the New Zealand's currency, further punished by the latest NZ GDT Fonterra auction and ANZ calls for further RBNZ rate cuts.
Against the Australian Dollar, the Kiwi is printing its worst levels since November 2013, currently just a few pips shy from hitting 1.14 and very much en-route to targeting a macro area at 1.1575/1.16, where solid offers are expected.
Smart money committed to NZD shorts
In the last week, as Nomura reports: "NZD shorts have been quietly building in the past couple months. Positioning in NZD was -$0.9bn as of Tuesday and is estimated at -$1.0bn currently. This is the most net short NZD has been." As per the Aussie, Large specs decreased last week as longs closed positions. Dealer longs increased while shorts stood pat. Same theme in lev funds, with shorts decreasing, but much less than those longs. Asset manager shorts didn’t add, actually decreased a bit.
AUD/NZD technicals: As bullish as its gets, overstretched run though
It is often said that when technicals, fundamentals and market tone/sentiment is in your favour, one could afford to up its risk as all conditions are met for projections to come true. That might be the case in the AUD/NZD market at present, with AUD/NZD having broken through a sticky resistance at 1.13 (nest target 1.16), fundamentals for the New Zealand economy are rapidly softening (further RBNZ rate cuts looming, at least that's what's been priced in), and the tone across the board being very negative against NZD, still not finding any major support to lean against vs the US Dollar, which is also undoubtedly diminishing demand interest for now.
Against the Australian Dollar, the Kiwi is printing its worst levels since November 2013, currently just a few pips shy from hitting 1.14 and very much en-route to targeting a macro area at 1.1575/1.16, where solid offers are expected.
Smart money committed to NZD shorts
In the last week, as Nomura reports: "NZD shorts have been quietly building in the past couple months. Positioning in NZD was -$0.9bn as of Tuesday and is estimated at -$1.0bn currently. This is the most net short NZD has been." As per the Aussie, Large specs decreased last week as longs closed positions. Dealer longs increased while shorts stood pat. Same theme in lev funds, with shorts decreasing, but much less than those longs. Asset manager shorts didn’t add, actually decreased a bit.
AUD/NZD technicals: As bullish as its gets, overstretched run though
It is often said that when technicals, fundamentals and market tone/sentiment is in your favour, one could afford to up its risk as all conditions are met for projections to come true. That might be the case in the AUD/NZD market at present, with AUD/NZD having broken through a sticky resistance at 1.13 (nest target 1.16), fundamentals for the New Zealand economy are rapidly softening (further RBNZ rate cuts looming, at least that's what's been priced in), and the tone across the board being very negative against NZD, still not finding any major support to lean against vs the US Dollar, which is also undoubtedly diminishing demand interest for now.