AUDNZD - Can it rebound?

Trading Discussion
1

I have bought this currency pair after the Australian unemployment report was released (I had a pending buy order in case of a disappointment and it was triggered during the Asian session). I think the AUDNZD is extremely oversold and while we are 100 pips off of our most recent lows my plan is to buy the dips as I think there is plenty of room for this currency pair to rally higher.

I do not think that the Reserve Bank of Australia will cut interest rates due to one disappointment in the jobs data which made the sell-off that more of a buying opportunity to me.

Those are just my ideas and not a trading recommendation.

2

Hi, I agree, and I am sure that this will happen, as you and I are not the only ones thinking that! Aud/Nzd is nearly all-time historic lows, but there will still be some room to the downside, so either make pips shorting it now, or go long with a 100-200 pip stop and wait for any swing to the downside to correct. I am long at present, and am watching this order coming to breakeven.

3

The problem with the aussie is the cpi numbers: some traders expected a better number and traded long for that, the problem is that when they exited there were no more buyers left.

The action on Aud/Usd was an indicator today - it couldn’t rise even though USD was being sold and Gold being bought - the buyers are not there yet for the Aussie.

I suppose it’s the old story, if it is going down then sell, if it’s going up then buy.

Having said all of that I’m very tempted to go against my own advice on the CAD tomorrow, just have a tiny inkling that the core cpi may not come out lower than expected, maybe beating the expect by more than 0.1, I’ll decide tomorrow before NY opening, but like the Aussie it’ll be only a day trade at best.

4

BTW it was nice to see all the intermarket analysis come together today, see how Gold was being bought (risk off) but no USD buying because of Fibre buying - (because of the French and German pmi numbers), so when risk was off they all ran to good old JPY (and CHF also in sync with Euro).

So what kicked it off? - Asian traders started to buy US bonds (risk off) and Gold (risk off), the EZ better pmi’s were anticipated so Euro buying started early in London.
The final domino to fall was Usd/Jpy at Ny open.

Edit: forgot to mention, with all the risk being off, guess what was happening stock indicies.

5

And my last BTW :slight_smile:

The kick off re the risk, and def not helping the Aussie, was China’s flash pmi, thus the Asian traders starting the whole thing.

Was today’s price behaviour predictable - resulting from two economic zones’ data?

6

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Hi there! What interest analyses you gave here! I had some interesting experiences today, where I was tens of pips in the red in GBP/CAD and GBP/NZD, both longs, while also being several tens of pips in the red for my CAD/JPY and AUD/NZD and NZD/JPY longs!

In other words: I went long the CAD and when I saw it fall I hedged it by selling it (buying GBP/CAD); however, when BOTH were losing money by lots of pips, I was in a pickle!

Thankfully things have straightened out, and my GBP longs have all gone in the money, and I have grabbed over 80 pips - my GBP bullish bias was right.

However, my CAD/JPY has made a generous tumble from the BoC no-change rate-decision and I am letting it re-surface slowly (currently bounced off its bottom by 70+ pips) - I am being extra patient with this one, banking on carry in the long run.

As for AUD/NZD, it dug lower than the 2008 low and went toward the 2005 low, but it started bouncing back up from approx. 1.0530, so I am just going to sit this one out and let it go back up - there is not much more room for sellers and this pair is only waiting for a catalyst before it goes up A LONG WAY.

Tomorrow’s CAD event risk may have already been discounted by traders, but as you said, Peterma, it could stir some volatility in CAD pairs in the last 24 hours of trading.

As for the EUR/GBP, again, the Pound was strong, and I have been making quite some pips out of the steady down-channel/trend for this pair, so I went in short but am now sitting at -60 pips after the PMI figures pushed the Euro higher; however, I will sit this one out too and let it make its mind up about re-joining the prevailing trend!

All the best with your trades, peterma!

Happy trading.

PS - The chart I posted shows the AUD/NZD through the last thirteen years, with the purple line at the bottom being the lowest boundary from which, my expectation goes, it must bounce off (unless the projected NZD rate hike is being taken seriously NOW)!

7

PS - CAD PMI did not completely disappoint, and CAD/JPY did rally up about 70 pips, but the bull spark has quickly waned… Not much event risk on the docket left now, but American trading starts now, so perhaps we may see some movement until the NY close.

Happy trading.

8

No, CAD cpi as expected, important to have been not lower than expected, esp for shorts from London Open, usual entry at Asian High or mid.

The risk element pervading the market has not cleared up in London, I’d say that maybe the later half of NY may be key.

Next news is Mon German confidence and new home sales US - haven’t done a lot of research yet on the German, quick glance on Home sales suggests lower number, we’ll see.

Update: S&P has opened down, I will keep an eye on it, Gold and USD/JPY to tell me when the bargain hunters have arrived.

9

There is also a stack of event risk next week, including the FOMC rate decision / asset purchases change (Taper) and RBNZ rate decision on Wednesday:Forex Economic Calendar @ DailyFX

There will be trades to be had, for sure!

Happy trading!

10

Wow guys…I just thoroughly enjoyed your conversation. That’s what I like! What the markets are doing and effecting the others. I’m trying to understand how they all affect one another.
You guys are smart. (Pipmehappy, peterma)
I guess it’s gonna take a long time for me to be able to put that stuff together. I do keep tabs on all the different financial happenings. I just don’t know how they are related to each other. Like "risk on, risk off ", and the other markets, like bond markets.
Anyway…thanks you guys!! Hope to hear more of this. Very interesting!!

Mike

11

Hello Mike! I am no smarter than the next person here! Peterma is quite sharp in his analyses, I agree. You should post your thoughts too!

12

Dont fight the trend! happy trading!

13

Well, bounce it did!

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14

I agree with you. I don’t expect the AUDUSD to go far higher.

15

Hi guys.
I’m in with the AUD/NZD. Bought it at 1.0713 this morning. Going north. I think the NZD is the weak one here, moreso, and making it go up. But also the AUZ showing some strength also.
Anyone else on the train?

Mike

16

Hi Mike!
Absolutely! I made a stack of pips this morning… AUZ/NZD is one of my ‘trades of the year’… This pair has MILEAGE! The upside retracement potential is MASSIVE. The good thing about this is, there is no rush to get greedy on this, because if the retracement plays out (i.e. we get a full-scale bull trend, not just a one-day correction to the upside) then there will be thousands of pips worth of gains, so you could take your time with it.

Good luck with it, Mike.

PS - There is no saying that any move to the downside is now impossible! I am just going by what I see, and what is before me is a strong start to a possible (and probable reversal). The rest is for nobody to predict!

17

Well,

AUD/NZD rose 270 pips between yesterday and today!!!

18

Hi spygirl, that was last Thur Night, I was looking for a fall the following day (that’s why the ref to a day trade only), but a week is a long time in forex.

Whether Aussie will fall from where it is now is not so clear, next Tue will clear the air, in the meantime maybe a little consolidation?.

Rising inflation could cause the RBA to state clearly that no further rate cuts are on the table - that’s the thing about statements, they’re hard to trade, give me numbers any day.

@PipMeHappy,

Speaking of numbers and the other trade in my post - USD/CAD, it too fell on Fri, after the cpi data.

Did I read somewhere that you are/were short on this one today?
Just interested in you analysis.

19

Hi Peterma, my overall outlook on USD/CAD is bullish, but today I saw an opportunity to trade a small correction, which I initially spotted through a bullish CAD/JPY move… so I took advantage of it and made 5.65 Pounds of profit (see the attached trade chart, on a 1minute time frame). That is it!

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20

Thks PipMeHappy.

For the AUD we will at least get to see what the RBA already know, their PPI (Purchase Price Index) which will tell them more about likely inflation ahead.
Anything higher than the lower number expected will be bullish for the Aussie. I’m finding this number hard to call, but I suspect at expected or higher.