Long AUD/NZD (From 5-Jun to 7-Jun)
Trade stopped out on 7-June
Real-Time AmpGFX – raising s/l AUD/NZD (Wed 6/6/2018 5:21 PM MT)
Position
Long half unit AUD/NZD at 1.0848; s/l 1.0843; t/p 1.0943
Real-Time AmpGFX – bought AUD/NZD (Tue 6/5/2018 5:55 PM MT)
Bought half unit AUD/NZD at 1.0848 (our capital at risk 78bp, see below)
Comment
Australian GDP is due out in around 2 hours. The median market expectation on Bloomberg is 0.9%q/q, 2.8%y/y
However, most of those analysts that have updated their forecast for the data this week are forecasting an outcome a bit higher. It could reach 3.0%y/y.
Australian economic reports have broadly been stronger than expected, but NZ reports have more frequently underwhelmed. NZ business and consumer confidence surveys show weakening trends, below average. Australian business surveys are around record highs.
Australian net export performance is also out-gunning NZ this year, and is being supported by higher coal prices, and rising LNG exports. NZ agriculture may suffer to some degree from the Mycoplasma Bovis disease affecting the dairy industry.
GDP in Australia looks likely to rise above that in NZ in Q1.
The rates outlook in both countries will probably not change much in the near term but could edge in favour of Australia.
We are looking for a modest rise in AUD/NZD within the range at this stage.
Position
Long half unit AUD/NZD at 1.0848; s/l 1.0763; t/p 1.0943
Our Capital at Risk: 79bp
By setting an initial stop loss of 1.0763, our (AmpGFX) percentage loss would be 0.79%. Based on our trade size this represents 79bp or 0.79% of our trading capital. In other words, our trade size here equals out trading capital.
In the past, I have provided some guidance on the relative size of our trades using “units”. I am working on providing a clearer understanding of the actual amount of capital we have at risk, as reflected in the results we report on our website.
How much capital an investor will allocate to each trade will depend on their capital base (assets under management), risk tolerance, and how each new trade might be considered to add to the existing risk in the portfolio.
As an investor or portfolio manager, you have to decide how to size your trade, and whether to trade at all. We are not providing any advice on these matters. To confirm we are licenced to provide only “general advice.” Please see our disclaimer and Financial Services Guide for more information.
Business surveys (Chart)
GDP %y/y (Chart)
Goods trade balance %GDP (chart)