
We have just taken a position to short the AUD/NZD pair. A week ago we highlighted the fact that it was
attempting to get through technical support at the 1.120 level. The time has
now come to act on that. The support indicated is so well established that a
genuine break through has every chance of being a sustained one.
The Fundamental Analysis comparison between the two economies is
compelling, and the key to it is the Chinese nation. Australia
sends Iron Ore , coal and natural gas to the People’s
Republic but this trade is now more than a little unreliable, due to the fact
that the importing country has capacity of its own and is, in any event,
adjusting to a lower growth model. The new China
will be of benefit to Australia ,
but in the long run rather than in the short to medium term.
Australian monetary authorities are deeply concerned by the relative
strength of the Aussie dollar. Right now they are content to try to talk it
down, but it is known that they are also considering market intervention in order
to achieve this result. New
Zealand , on the other hand, has gone public
on its contemplation of the idea of raising
interest rates in the future. The Reserve Bank of New Zealand sees short term interest
rates rising over 200 basis points from 2.5% now to over 4.5% within two years.
So we see the time as right to take a position.
Thats great to have this well explained by charts thanks for this.
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