AUD/NZD update

Hi,

I am travelling this week and next, conducting marketing for my business in New York, Boston (Today) and London next week.  Hence my lack of written work so far this week.

Unfortunately for me, my last stop/loss in AUD/NZD was triggered on Tuesday, near the low, it seems around the time that the RBA August policy meeting minutes were released. Albeit in profit, it leaves me square and missing the rebound in the pair.

I didn’t get back into the long AUD/NZD position since iron ore prices were weaker in the last week and the Chinese economic data were weaker than expected.  The Australian wage cost index was soft as expected. As I noted last week, the monthly consumer confidence was weak, and the underlying components of the NAB business confidence were softer, although the conditions and confidence measures remained strong.

However, I still generally like the trade on the basis that the AUD/NZD longer term valuation still looks cheap and Australia’s external balance is much improved.  NZ politics is still a potential short term weight on the NZD.

The Australian labour data later today is obviously key; I see risk biased towards a stronger than expected number. In general, the RBA and the market appears to have set a low bar for unemployment to improve faster than expected over the year ahead, and labour market indicators and recent activity indicators suggest that the market is under appreciating the current pace of growth.

See my AmpGFX report just sent: RBA holding still waiting for big waves to hit.