AUD/NZD
Yesterday's little play off the USD/HKD 1 hr 100 MA came off nicely for a free lunch. Not bad at all. Rinse and repeat or one and done? I'll let you decide.
Today's chart for us to look out is one I have been looking at all week. It is the AUD/NZD chart and has been on my radar ever since the RBNZ altered their forward guidance giving a lower for longer message. See here for my post earlier in the week.
The one fly in the ointment for this trade, for this week, had been the key data out of Australia for this week; the jobs data and Lowe's speech. Check out Eamonn's reports on the jobs here. As well as his reports on Lowe's speech via the trading wrap here. The bottom line takeaway was that the jobs were not terrible (with some full time jobs being added, woohoo) and Lowe's speech was largely ignored. So, all good to go there.
The other interesting thing to note is that the PBOC added a bit of strength to the Yuan. See Eamonn's comments at the top of the news wrap here. This was largely unexpected by analysts, but it shouldn't be if you know your geo-politics. This is a bit of signalling going on here, China is trying to de-escalate a US/China trade war. There has been a lot of talk about Asian culture not wanting to 'lose face'. However, this is not an an Asian problem , but a human one. No culture likes to be seen to back down. It just manifests in different ways across the cultures. In the China and US relationship China is looking for a way to de-esclate the situation.
What is happening is that this is a wider part of US strategy for the Asia and Pacific region. Under president Obama the US made a key foreign focus shift from Europe to Asia. The so called 'Pivot to Asia'. It is not hard to see the reasons why with half the world's population living in that region and half of all global economic output due to be coming from that region by 2050. Asia is critical to the US and there is a continual tug of war in the region as to which side you are on. China or the US. Which superpower do you cuddle up to? This issues is wider and deeper than this one post can make, however the takeaway for me is twofold:
1. The US and China are going to have lots more clashes in the years to come
2. For now, China will backdown.
So, from a geo-political position, it seems most likely that China will find a way to de-escalate the US/China 'war' debacle. AUD should rally if and when it does. The last two days have seen glimmers of hope for that.
From a technical perspective, it gets simpler thankfully. AUD/NZD sitting at 100MA on the 4hr chart and the 50% fib level. Risk can be defined below the 100MA (blue line)