AUD/NZD, EUR/NZD Offer Best Non-FOMC Trades into Next Week
- AUDNZD may be flagging for a move towards N$1.2200.
- See the September forex seasonality report.
The US Dollar will be heavily influenced by all things Fed-related (data, news, rumors) over the coming week - it may be best to look elsewhere. Specifically, activity in several of the AUD- and NZD-crosses suggests that breakouts may be looming in the near-future. Certainly, the September 17 FOMC meeting represents a veritable source of risk that will jump-start volatility across the FX market.
Heading into the meeting, those traders that are looking to either take on tangential FOMC exposure or avoid it all together have opportunities in EURAUD (tangential FOMC exposure), EURNZD (tangential FOMC exposure), and AUDNZD (avoiding FOMC altogether). For EURAUD and EURNZD in particular, recent triangles that have formed since the end of August (if that's the valid interpretation) have yet to find resolution, although price action over the last few days may be starting to favor a move for continuation higher. (Concurrently, our latest weekly SSI update forecasts further New Zealand Dollar weakness given retail trader positioning.)
AUDNZD's recent consolidation finally warrants attention after price developments in the wake of the better than expected Australian jobs data and the Reserve Bank of New Zealand's rate cut. After consolidating in a triangle for the better part of the past three months, it seems the pair is on the cusp of a continuation move higher towards N$1.2285 (100% measured move from April 21 low to July 2 high, extended to the July 28 low)
--- Written by Christopher Vecchio, Currency Strategist
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