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Viewing entries tagged with 'NZD'
NZD/USD - Trend Ready
All
The NZD/USD is carrying over its relative weakness from overnight with another very poor performance today.The pair is TREND READY and following the false break profiled in my two recent articles (USD pairs – An intriguing week) that trend looks very likely to be DOWN.
My experience is that trending moves occur from periods of tight consolidation. The pair has been trapped in a narrow range for over 5 weeks now. If you like, think of it as a period of play where bulls and bears battle it out with little or no effect until the loser is vanquished and the winner free to have their way. This is precisely what is happening.
The false break to the upside on Thursday only serves to make the move down more enduring as week shorts get stopped out prior to the move unfolding thus removing a number of buyers on the way down.
Daily chart – Bollinger band are very tight reflecting the narrow range trade of recent. Thursday clearly looks to have been a false break.
NZDUSD Daily – click here to view chart
Hourly chart – a closer look. MACD is doubling down from below 0, not a good look.
NZDUSD Hourly – click here to view chart
As with all trades, no matter what the conviction, position sizing is paramount. For those wishing to trade this move please call in for discussion on appropriate positioning.
Regards G.
USD Pairs - an intriguing week
All
I used the term ‘intriguing’ in my headline but I could just as easily substituted ‘nasty’. My sell recommendation in the AUD/USD was in the money by 100 points the very next day but two days later the AUD/USD was 220 points higher. Only the nimble made money.
Overnight the world seemed to go mad on embracing ‘risk’ but the world economies that I read about look decidedly troubled. Personally I am a bear on global growth which is suggestive of equities going lower and presumably ‘risk’ being shunned. However the charts as I interpret them do not support my view for the moment. That leaves me side-lined.
A few charts of interest that I am watching.
Dow Jones Index – I interpret this chart as the beginnings of a new bear market. The 7 month up-trend has been broken and the rally of the last two days I believe is just a re-test of the break down. Also bear markets are noted for their volatility and where you can see the grinding nature of the last few months up, the latest moves have been very ‘noisy’ (big down, big up).
Dow Jones – click here to view chart
NZD/USD – The kiwi is historically VERY highly correlated to the performance of U.S. shares. And yet this chart absolutely contradicts my equity market view right now. Right now, if the kiwi closes the week above 0.8261 then a ‘bullish engulfing week’ would be suggestive of higher ahead.
NZDUSD – click here to view chart
Not only is the kiwi showing ‘bull’ signals but EUR, AUD, GBP, Gold and Silver are all displaying positive signs on my short term models. Usually I’d just follow them but for some reason I can’t shake the ugly feel I get from reading about the prevailing fundamentals.
Personally I’ll be sitting the week out and looking for more clues come Monday.
Regards G.
USD Pairs - an intriguing week (part 2)
All
Friday’s price action is highly suggestive that my preferred ‘negative equities –slowing global growth’ theme (see below previously) is the prevailing wind. I’m suggesting selling EUR/USD here and now with sell signals in NZD,AUD, Gold and Silver very close at hand.
Technically if you look at the ‘risk’ complex they are all very ‘trend ready’……………..that is they have been confined to very narrow ranges (and thus very narrow Bollinger Bands) for a month or so and that is typically where the best moves spring from.
NZD/USD
NZDUSD – Click here to view chart
EUR/USD
EURUSD – Click here to view chart
Gold and Silver look on the edge of the precipice too with a move through last week’s lows likely to be a precursor to substantial falls.
Regards G.
AUD/USD - Downmove should continue
All
Just a quick note first up this morning. The AUD/USD pair should continue to fall today following the significant ‘risk off’ theme overnight. With the Dow recording its largest fall this year, the IMF suggesting commodity prices will fall and China trade will slow, the AUD should be an easy target.
The charts shows not only a ‘bearish engulfing day’ (my all-time favourite indicator) but a break of the 7 month uptrend support line (NZD has broken its respective support too).
Dr Copper - Another clue
All
Since my piece of last week ‘Watershed USD strength – digging deeper into the FED speak’ market action has been somewhat mixed with the long standing relationship between a soft USD and stronger global share markets breaking down. So what is going on?
One clue could be the performance of industry integral, base metal, Copper (or Dr Copper, PHD as Gartman likes to refer to it). The following chart documents the rather large 6.2% fall last week.
The fall suggests traders see slowing global demand (and less scope for a growth supportive U.S FED?). This should be a poor sign for the likes of NZD/USD and AUD/USD with AUD and Copper being very highly correlated over the years.
G.
USD Strength - was that it?
The last two weeks have been categorised by a sharp bout of USD strength.
Since U.S. Fed chairman Bernanke’s testimony to congress on the 8th of March, where he made no mention of another money printing program (QE3), the market has had it in their collective minds that the FED is changing course (super easy U.S. monetary policy has been at the very fore-front of FX moves since the GFC).
This is despite the fact that Bernanke, in his Q&A session at the congressional testimony, suggested that growth wasn’t following the improvement in jobs and that there was a ‘fiscal cliff’ approaching in the form of the withdrawal of some very supportive U.S government spending programs later in the year. Indeed in the FOMC meeting of last week, the FED reiterated their stance that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. Does that comment sound like the FED are about to change course?
So given my view that nothing has changed what can the charts tell us? Well everywhere I look the charts suggest that the USD strength was short term in nature and the bigger trends are reasserting themselves.
Exhibit 1 – NZD/USD weekly chart. A clear bullish hammer here last week with a similarly ill-fated trip south the prior week both suggestive that solid buying interest is present below 0.8180 (no closes lower than that the last two weeks despite dips toward 0.8060). Further the last 3 weeks appear merely ‘corrective’ to the bigger trend up off 0.7300. Note the gorgeous key weekly reversal at the 0.7300 lows!
NZD USD Weekly Chart click to view
Exhibit 2 – NZD/JPY weekly chart. Arguably the NZD/JPY is the ultimate arbiter of ‘risk’ and this chart is even more impressive. A fierce pullback on Bernanke testimony that was very short lived creating a very significant ‘hammer’ rejection followed by a seeming confirmation move higher last week.
NZD JPY Weekly Chart click to view
Exhibit 3 – The Dow Jones Index. The share market does not look concerned about higher interest rates anytime soon as it surges to new 4 ½ year highs.
The Dow Jones Index Chart click to view
In summation the 3 charts shown suggest strongly to me that the focus on a FED change these last two weeks is ill-considered and the broader conditions that have been in play for so long are now reasserting themselves.
Another confirming factor for USD weakness
We are seeing USD weakness prevalent everywhere right now. Gold and Silver moving strongly higher, EUR at 4 month highs, NZD and AUD pushing at the top of 1 month consolidations. In Asia earlier today we saw SGD (Singapore Dollar) gap higher and now this news on China
SYDNEY, Feb 29 (IFR) – The PBOC has set USD/CNY today at 6.2919, the lowest level (or highest yuan value) since the 2005 revaluation
This feels to me like the 2010 when I often noted “if it’s not one thing making new highs against the USD then it’s another”.
New Zealand Dollar rises to 0.8380
THE NZD/USD is continuing to build on its gains firming to a session high of 0.8381, buoyed by solid domestic AUD/USD buying as well as NZD/YEN cross demand out of Tokyo which has seen the cross rally from 65.75 through 66.00 triggering follow through buying. Comments from Mr Bollard that “The income gap between NZ and Australia and other OECD countries may be smaller than it appears from official figures.
New Zealand’s gross domestic product, for example, could be roughly as much as 10 per cent higher than official figures suggest, when compared with Australia, he said.
