The AUDNZD long trade I published a few weeks ago has made good but slow progress. These highly correlated currencies have low volatility relative to each other. I still believe the pair has made a major change in trend and will be looking to increase the trade size should the pair complete the pattern forming on the point and figure 1 box reversal chart shown.
Headwinds clearly lie ahead with the ever slowing chinese market and the various risk aversion themes brewing around the industry. New Zealand acted quickly to increase its bank rate when Australia held firm and eventually reduced its rates, I think this dynamic puts the AUD at the bottom of its cycle and the NZD at the top of it's. Going forward the gap is likely to close giving this trade a boost.
Headwinds clearly lie ahead with the ever slowing chinese market and the various risk aversion themes brewing around the industry. New Zealand acted quickly to increase its bank rate when Australia held firm and eventually reduced its rates, I think this dynamic puts the AUD at the bottom of its cycle and the NZD at the top of it's. Going forward the gap is likely to close giving this trade a boost.
