NZDUSD:Failed Short Trade: Ready to close short position

アップデート済

NZDUSD: Ready to close short position. Initially, I was short. The quality of this trade was bad. I believe patterns can break, and in this case, New Zealand's news broke this pattern.

I am about to close this position if 0.7240 is breached. Besides that...I shall get some rest.

トレード終了: ストップロスに到達

ノート

Here is my own words and my own fundamental view of the New Zealand economy and currency as a whole:

The New Zealand currency is in mildly strong position fundamentally as its economy tempers itself to modest levels this year to 3 from 3.4% in 2015, and 2.7% in 2017. Tourism grew, as well. Lower dairy prices have negatively impacted exports. The central bank is dovish as it continues to lower its rates. More rate cuts are ahead, according to the signs that the central bank has given the world. It has cut rates 5 times already in one year to a record low of 2.25%. Their goal is to attempt to push inflation back to 2% from its current level of 0.4%. A weaker exchange rate can help them achieve their goal. This level of inflation they project to hit by 2018.

The biggest risks to this currency that may or may have already started to happen are the following:
1. Inflation: Inflation will rise but stay below target.
2. Housing: If there is a sudden drop in construction in Canterbury and Auckland, then housing investment and consumption would suffer (Canterbury was affected by an earthquake and Auckland has a housing shortage). So, the risk is a slowdown in activity due to the a slowdown in construction from an end in monetary stimulus from earthquake-related rebuild projects, but the influx of immigration so far has actually boasted construction in Auckland, lessening the effect of the government of NZ ending the earth-quake related reconstruction.

Recent news today (July 7, 2016) have pushed this currency higher: bloomberg.com/news/articles/2016-07-07/rbnz-may-extend-property-investor-lending-limits-beyond-auckland
3. Commodities....
4: Weaker global prospects for New Zealand..
5: Currency: A strengthened currency is detrimental to this economy
6. External risks: The China Factor: China has a high demand for dairy products from New Zealand and imports many goods from NZ top trading partners. Any change to this will have an impact on the currency. Eurozone: Any change to the European Union’s bureaucratic policies on dairy products will have a big impact on the farms in New Zealand (their incomes and their consumption, which, in turn, will affect the rest of the economy).

At the end of the day, I am still a bearish neutral the New Zealand dollar as rate cuts are on the table later on.

- Rocketman