AUD/NZD
It was the 14th of May where I first signalled my interest to go long on the AUD/NZD pair. I then had another look at it on the 25th of May. So, here we are again at the end of June and I favour a long swing position on the daily chart. This time, I favour an entry at market rather than waiting for any pullback.
The Bank of New Zealand are releasing their rate statement on the 27th of June. At the end of Q4 RBNZ had a CPI miss of 1.6 vs 1.9 and Q1 saw inflation at it's lower end of the band at 1.1. On the 20th of June the Q1 growth was 0.5% and that was beneath the RBNZ's forecast for 0.7%. Capital economics said that with, "GDP growth likely to fall short of the RBNZ's projections and inflation set to remain subdued, we anticipate that rates will remain on hold for even longer than the RBNZ or the financial markets currently expect.We suspect that the first rate rise may not occur until 2020." NZD bearish.Eamonn was out with some previews earlier too.
The RBA has a stronger picture. The Aussie has been bearing the brunt of the US and China trade 'war'. Yet, Australia has it's GDP expanding at 3.1% annually in Q1, its strongest reading in 2 years. There is a 6th of July trade deadline, so any resolution in the China/US trade spat will result in relief for the AUD. AUD has potential for upside, certainly more so than the NZD
Technically, AUD/NZD is offering an excellent ABCD trade set up. The ABC leg is complete now. The extension of the last Daily candle above the 5 EMA on the chart below shows price going in the right direction of the final D leg. So, the trade parameters are stops below 1.0650 and targets of the 1.11000 handle which is the AB extension.
