It doesn't take much brains to figure out why the NZD tanked against the USD after the ISM data.
Seems there are still dozens born every minute because many so called "experts" in forex have been exhorting people to go long NZD for a week now and many did in fact go long.
So here they are stop hunting, hoping to make money off the gullible traders.
Given the high interest rate, I might choose to go long just about now at the .82965 level.
Somehow I have this feeling that the USD is about to pull a surprise.
But that's just me. I trade price action and I don't make any claims about being an expert. Not by a long shot.
All the advice I can give is simply this. Think carefully before pursuing the experts advice.
Showing posts with label nzd/usd. Show all posts
Showing posts with label nzd/usd. Show all posts
Tuesday, September 2, 2014
Tuesday, August 19, 2014
Curious NZD behavior
The Global Dairy Trade event today showed a -0.6% decrease in milk prices.
While this was expected to (once again!) hit the NZD, the curious thing is that it did weaken, then it rapidly moved back up, even surpassing the levels prior to data release.
I believe the explanation for this is the fact that many who follow the NZD milk trade know that the price of dairy is naturally hedged and if historical data is any indication, in comparison to prices this time last year, the prices are relatively better. Those who trade NZD seriously are without a doubt, aware of this fact.
Hence, the logical conclusion is that the rapid movement just a few minutes ago is merely the attempt by some well funded traders to profit on the initial volatility that precedes and accompanies data release.
Anyway, those who wish to learn more about this milk price hedge can read about here
While this was expected to (once again!) hit the NZD, the curious thing is that it did weaken, then it rapidly moved back up, even surpassing the levels prior to data release.
I believe the explanation for this is the fact that many who follow the NZD milk trade know that the price of dairy is naturally hedged and if historical data is any indication, in comparison to prices this time last year, the prices are relatively better. Those who trade NZD seriously are without a doubt, aware of this fact.
Hence, the logical conclusion is that the rapid movement just a few minutes ago is merely the attempt by some well funded traders to profit on the initial volatility that precedes and accompanies data release.
Anyway, those who wish to learn more about this milk price hedge can read about here
Thursday, July 24, 2014
Strange NZD behavior
The RBNZ came out with a decision to raise the NZD cash rate by 25 points to 3.5 from 3.25.
This decision was largely expected though normally, even in this case, the currency tends to rise substantially.
Strangely enough, the NZD not only refused to rise, but even went down substantially.
Explanations of several forex columnists revolved around the statement of an RBNZ governor that this would be the last raise for some time. While this statement is a bit of a let down, this point of view ignores the fact that the NZDD has the highest cash rate at the moment.
The AUD has a rate of 2.5 right now so the NZD has a significantly higher rate. Sure its a far cry from the 7% in 2008 for the AUD, but 3.5 for the NZD is certainly nothing to sneeze at.
Anyway regardless of this curious behavior, I am happily trying to go long on the NZD right now in an effort to use it as a replacement / supplement for my AUD in so far as my carry trades are concerned.
This decision was largely expected though normally, even in this case, the currency tends to rise substantially.
Strangely enough, the NZD not only refused to rise, but even went down substantially.
Explanations of several forex columnists revolved around the statement of an RBNZ governor that this would be the last raise for some time. While this statement is a bit of a let down, this point of view ignores the fact that the NZDD has the highest cash rate at the moment.
The AUD has a rate of 2.5 right now so the NZD has a significantly higher rate. Sure its a far cry from the 7% in 2008 for the AUD, but 3.5 for the NZD is certainly nothing to sneeze at.
Anyway regardless of this curious behavior, I am happily trying to go long on the NZD right now in an effort to use it as a replacement / supplement for my AUD in so far as my carry trades are concerned.
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