James Kim@Saxo
In this webcast, Saxo's global sales trader James Kim runs through the events of the week ahead and give his thoughts on the positioning of S&P, Hang Seng, US Dollar Index, EURUSD, USDCHF, NZDUSD, AUDUSD, USDJPY, XAUUSD.
Short term
Trade view / 27 November 2014 at 13:43 GMT

The kiwi is this Thanksgiving's turkey

FX Trade Strategist /
Instrument: NZDUSD
Price target:
Market price:

The kiwi has popped like the thermostat embedded in a Thanksgiving turkey. The move was due in part to news that the Reserve Bank of New Zealand only sold NZD $1.0 million in October.  

The amount is well down from August's NZD $521 million sale, but that only means that the RBNZ has a lot of ammunition in reserve if it wants to take advantage of thin year-end markets to intervene again. 

A jump in AUDNZD demand also helped NZDUSD rise. October’s large trade deficit on falling dairy exports to China reminded traders of the New Zealand economy's vulnerability to further Chinese slowdowns.  

The RBNZ is still complaining that NZDUSD is overvalued and the threat of renewed intervention should cap gains. The intraday NZDUSD technicals are bearish, with the failure to extend gains above 0.7930 combined with the reversal below 0.7900 suggesting further losses.

Management and risk description

The risk to this trade includes the fact that NZDUSD has been rather directionless in the short term. Renewed selling of AUDNZD could limit NZDUSD losses. Chinese PMI data could boost NZDUSD if it is stronger than expected, triggering the stop.  

It would be prudent to review the performance of the trade prior to the December 10 RBNZ interest rate announcement and next Friday's US employment report.


Entry: Sell ½ NZDUSD at market (Currently 0.7895) balance at 0.7960.

Stop: 0.7985.

Target: 0.7780.

Time horizon: Two weeks

NZDUSD one-hour with break of weak intraday uptrend noted
Source: Saxo Bank

NZDUSD four-hour downtrend and Fibonacci target 
Source: Saxo Bank

NZDUSD daily five-year with moving averages
Source: Saxo Bank

— Edited by Michael McKenna

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This investment research has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further it is not subject to any prohibition on dealing ahead of the dissemination of investment research. Saxo Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. » Read more
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