Two weeks ago, I suggested that the kiwi dollar could stop falling (after 12 consecutive weeks of declines against the US dollar) as a long term support at $0.65 was being tested. Prices are back up to $0.6515 just before the RBNZ rate statement later today. The consensus expects another 25 bp cut in the main refinancing rate to 3.00%. The latest cut took the markets by surprise in June, but I'm a bit skeptical of a strong movement downward this time around given that it may already be priced in (this doesn't necessarily mean that there will be a kiwi rally following the statement. To me, what really matters is the language in the press release. I don't expect much of a change from the June statement, but it is very likely that the RBNZ maintains an overall dovish stance with regards to inflation expectations given continued decline in commodities prices since June. The GlobalDailryTrade (GDT) price index (globaldairytrade.info/en/product-results/) fell to all-time lows on 15 July, which may weigh further on New Zealand export prices. In the event that the RBNZ doesn't announce a rate cut today, I'll still maintain a fundamental bearish bias on the kiwi dollar and will look for any additional dovish information in the press release to support this view. As for technicals, so long as prices trade below $0.67 following the rate statement, short strategies may come back into play. If prices test the channel resistance (currently around $0.67) with rates unchanged, this is where I'd be looking for further dovish hints in the press release to really consider a short trade (initial target at $0.65 with stop above $0.6750).
Conclusion : technicals and fundamentals may line back up following the RBNZ statement today, providing new opportunities to short the kiwi dollar.
Thanks. This is the only one that worked for me today.
IvanLabrie
⋅
Well, same here. I had to get out in profit before things went south in eurusd and gbpusd longs. Then shorted it during jobs release.
Now long eurnzd, gbpaud and short nzdusd and gold.
IvanLabrie
⋅
What do you think of crude and usdcad Adrian?
ABRAK75
⋅
There might be a negative divergence on USD/CAD, but I'm starting to think that it's no good. If prices break higher tomorrow, this will probably be followed through next week.
IvanLabrie
⋅
Yes, I entered a short at the recent top 30 minutes ago or so.
Risk is 0.125% so not a huge deal.
ABRAK75
⋅
The resistance was hit perfectly today.
moneymaking
⋅
Hey Adrian, Yes you analysis was on dot. Currently I am seeing RSI divergence on Daily time frame, But I only take divergence into account when the market starts to violate structure in the direction of the divergence. Do you think we could possibly see a shift in trend?
ABRAK75
⋅
Hi moneymaking, I've seen others point out that divergence. I don't think it's very noteworthy given the shallow angle between the RSI lows.
moneymaking
⋅
Is there specific angle that it should have, in order to pay attention to the divergence?