AUD/NZD short

Two countries with opposed outlooks at the moment are Australia and New Zealand. The latest guidance from the Reserve Bank of Australia was a downward revision in growth and inflation forecasts. The ongoing Us-China trade war situation has been a continual drag and a number of central banks are now following the Fed's lead. Pause and delay is becoming the new status quo as US growth is in the balance. Trump may say he is delighted with Chinese tariffs, but the global growth drag with the World's two leading economies at loggerheads is anything but good news. In reality he has toned down his rhetoric to try and reassure the market that he is not about to create big trouble with 'little' china. He doesn't want the S&P500 losing value. Rather, he is going to be openly positive and then work like Charlie behind the scenes to try and secure American intellectual property and cope with an expanding Chinese foreign policy that matches it's growing strength. Other major powers are having to now draw out their red-lines to show what the new limits for a Chinese foreign expansion are. The UK are currently sending out their flagship aircraft carrier down to the pacific sea to remind Beijing that some lines are not to be crossed. Australia has around 30% of it's GDP linked to the Chinese economy, so what is bad for China is bad for Australia. Hence we see, a recognition of slower expansion for Australia from the RBA's last statement.

AUD/NZD short

By contrast the Reserve Bank of New Zealand was decidedly less dovish than expected. The New Zealand dollar appreciated by the most last week on a less pessimistic RBNZ. RBNZ's Governor Orr stated that the chances of a rate cut had not increased. They had been expected to be pretty dovish, so the omission of the 'dovish' slant was taken positively by the market and the NZD was well bid.

So, I like a AUDNZD short on a pullback. Looking at the daily chart I like a 1.0450 short from the Pivot point on teh chart below with a 100 point stop above the recent daily swing highs.

RBA and RBNZ