News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • What are some trading takeaways from 2020, as we jump into the new year? Find out with your free guide here: https://t.co/e7udCTJlmf #DailyfxGuides https://t.co/OXUgYIl2ru
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here: https://t.co/8A1QhwMVKo https://t.co/xncree8XaW
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/gGOU1RVQzq
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/wrI29FTN41
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/t9Flsqcxo9 https://t.co/UzzC1bGzRJ
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/46bdHdOmOV
  • Central banks often deem it necessary to intervene in the foreign exchange market to protect the value of their national currency. Learn how central bank intervention can impact your trading here: https://t.co/8G8mUX4so6 https://t.co/6FokpDbL65
  • Use this technical analysis pattern recognition skills test to sharpen your knowledge: https://t.co/Qgz89PTxnu https://t.co/TwrOBFgIwj
  • Gold prices were crushed this week as yields continued to climb. But with a big spot of support coming in, can buyers bring a bounce ahead of NFP? Get your market update from @JStanleyFX here: https://t.co/E1TTXVJGUm https://t.co/pD4TeAY3ZP
  • Get your snapshot update of the of market open and closing times for each major trading hub around the globe here: https://t.co/BgZLFljIhZ https://t.co/PiLYJDVvtY
NZDUSD Outlook: RBNZ May Spark Larger Short Squeeze

NZDUSD Outlook: RBNZ May Spark Larger Short Squeeze

Justin McQueen, Analyst

NZD Analysis and Talking Points

  • NZD Looks to RBNZ’s Final MPS of the Year
  • Mixed Data Calls for Neutral Stance
  • NZD Shorts Vulnerable to Further Short Squeeze
  • O/n expiries suggest break-even of 52pips

See our quarterly NZD forecast to learn what will drive prices through mid-year!

The Reserve Bank of New Zealand will publish its final monetary policy statement of the year at 2000GMT where the central bank is expected to maintain the OCR rate at 1.75%. OIS (Overnight Index Swaps) have more or less fully priced in an unchanged rate decision. Consequently, focus will be on the monetary policy statement and whether the Governor Orr may provide a more balanced approach, relative to his dovish tilt in the August MPS.

NZDUSD Outlook: RBNZ May Spark Larger Short Squeeze

Source: Refinitiv (RBNZ Interest Rate Expectations)

Mixed Data Calls for Neutral Stance

Since the last RBNZ rate decision (Sep 27th), economic data has been broadly mixed, although the central bank will likely take pleasure in the fact that inflation for Q3 moved closer to the mid-point of their 1-3% range, while the latest jobs data had also surprised to the upside. Although, with a closer inspection of the recent data, headline inflation jumped on the back of a falling exchange rate and rising fuel prices, while the central bank’s preferred inflation model (Sectoral Sector) remained at 1.7%. Alongside this, the latest jobs report highlighted that wage growth remains subdued. However, an acknowledgment by the RBNZ of improving could provide a lift for the NZD as markets reign in bets of a rate cut.

New Zealand Economic Data

Date

Latest

Expected

Verdict

Manufacturing PMI (Sep)

Oct 11th

51.7

52 (Prev.)

Bearish

CPI (Q3)

Oct 15th

1.9%

1.7%

Bullish

CPI Sectoral Sector (Q3)

Oct 15th

1.7%

1.7% (Prev.)

Neutral

Trade Balance (Sep)

Oct 24th

-1.56b

-1.47b (Prev.)

Bearish

Fonterra Milk Prices

Nov 6th

-2%

-0.3%

Bearish

Jobs Growth (Q3)

Nov 6th

1.1%

0.5%

Bullish

Unemployment Rate (Q3)

Nov 6th

3.9%

4.5%

Bullish

Source: DailyFX (New Zealand Economic Data Since RBNZ’s September Meeting) *Please send feedback on table if helpful

Trading the RBNZ

Given that market pricing is fully priced in for an unchanged rate decision, the focus will be on the monetary policy report. In light of recent encouraging data, the RBNZ may adopt a more positive outlook and a less dovish rhetoric relative to comments made in August. It is unlikely that the RBNZ will alter its rate guidance (“the next move in the OCR could be up or down). Although, they may rethink their OCR forecast by bringing forecast expectations of a rate rise (current seeing a rise by September 2020). As such, with NZD short positioning hovering around the highs of the year at 2.296bln, the currency is vulnerable from a further short squeeze.

Option Pricing suggests that we could see some modest volatility over the event with vols indicating a break-even of 52pips.

NZDUSD Price Chart: Daily Time-Frame (July 2017-November-2018)

NZDUSD Outlook: RBNZ May Spark Larger Short Squeeze

Chart by IG

Following the breakout from the descending trendline, NZDUSD has continued to saw. However, resistance on the upside at 0.6830 (200DMA) and 0.6850 (38.2% Fibonacci Retracement) may see gains in the pair begin to top out, particularly given the size of the gains in the short time period.

NZDUSD Technical Strategy

IG CLIENT POSITIONING AHEAD OF RBNZ

Data shows 60.6% of traders are net-long with the ratio of traders long to short at 1.54 to 1. In fact, traders have remained net-long since Sep 20 when NZDUSD traded near 0.65776; price has moved 3.1% higher since then. The number of traders net-long is 8.3% lower than yesterday and 17.1% lower from last week, while the number of traders net-short is 9.0% lower than yesterday and 11.4% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZDUSD prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed NZDUSD trading bias.

NZD Analyst Picks

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES