Long AUD/NZD (From 4-Dec to 5-Dec)
Real-Time AmpGFX – sold AUD vs USD and NZD to square positions (Wed 12/5/2018 8:53 AM MT)
We sold AUD/USD on our stop-loss order, and decided to also close our long AUD/NZD position at 1.0520.
The Australian GDP was obviously a major negative for the AUD well below expected and a significant downward revision to the annual growth rate last quarter.
The GDP report had some positive elements, including strong public spending, and the outlook for the Australian economy remains reasonably balanced. But there is room for pessimism to seep in over what may be a slowing trend in household consumption. This will place more attention on the retail sales report later today.
We were holding a long AUD position in light of other factors that we still think may be positive for the AUD including the US-China trade truce, less hawkish Fed, news which we see as potentially net positive for GBP and EUR.
However, AUD has been dragged down by the more dovish than expected Bank of Canada policy statement.
This has triggered our stop loss, and we want to clean all positions to reassess, including AUD/NZD.
We had been looking for a trend line support for AUD/NZD to hold (around our entry level 1.0590), and this has clearly broken. It may find support at its April low (1.0488), but we want a clean slate to consider the best opportunities from here.
The market is at risk of excessive volatility with US markets closed on Wednesday.
Real-Time AmpGFX – Bought AUD/NZD (Tue 12/4/2018 12:01 PM MT)
Bought one unit AUD/NZD at 1.05925
AUD/NZD is sitting on a long-term trend line support with four previous touches. We are predicting that it will hold for a fifth time.
The fall in the AUD/NZD appears excessive with respect to interest rates, commodity prices, external balances and economic momentum.
Despite the mixed reporting, the trade truce between the US and China, is a significant improvement from escalating tariffs and should tend to support the AUD that been highly correlated with Chinese equities and currency.
There are several key Australian economic reports out in coming days, starting with Q3 GDP later today, trade balance on Wed and retail sales on Thursday. We have no particular insight as to if these data should be higher or lower than expected.
Long one unit AUD/USD at 0.7312; s/l 0.7273; t/p 0.7548; slop loss raised from 0.7243 (Capital at Risk 0.39%)
Long one unit AUD/NZD at 1.05925; s/l 1.0473; t/p 1.0994 (Capital at Risk 1.68%)