G'day DollarBull, mwm12 & anyone else watching the NZD/usd:

Looking for thoughts on where the NZD/Usd is going short term & long term both.

Good to find others with an eye on this pair. Interesting view of the perceived continued weakness of the Kiwi dollar DollarBull. I am new to this as well as mwm12, but somewhat on the other side of the trade...now having funds in the us I'd like to move to NZ sometime. But no need to do so until the exchange is profitable...living parttime in both countries.

So I'd like to occasionally take best advantage of moves either way...without watching daily. But next trade will be Us to NZ. I agree it appears NZ will have to lower interest rates, so money in NZ will unfortunately not earn as much. On the positive side of that, that might mean the ex. improves even more for a move to NZD.

As this recession deepens in both countries, will the Us dollar maintain greater strength than the Kiwi? If so, does that mean there is potential for something less than 0.50 yet before the end of this year?

I would recommend that since this is the money you live on (and not necessarily invest with) that you simply exchange it each week when paid. The time between your getting paid and your spending the money is relatively short; so there is no need to try and speculate on currency direction.

As for any savings you may have, that is a more sticky situation. I agree with Dollarbull that over the long-term the pair will decline. After hitting a record low, the world is noticing that the US currency was way too oversold and people are looking to the sheer size of the economy and the stability of of their financial markets with respect to policy enacted and looking to reinvest their capital back in the US.

If you look back in the past few pages of the USDCAD thread, I and a number of people recommended means for removing the speculative influence in deciding when to exchange your funds (stages, with limits in mind, etc).

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

I'm surprised no one has talked about the big event risk tonight/this morning - the RBA rate decision.

Official expectations are calling for a 50 basis point rate cut, which would take the benchmark lending rate down to 5.50 percent. That is a big hit to a currency that recieved much of its strength over the past few years from its impressive yields matched against a strong, commodity-producing economy. Now few are looking for yields, commodity demand has plunged as global growth contracts and Australia is looking at its own recession (though the market hasn't really priced that in just yet as we haven't had much in the way of reliable data to confirm those suspicions).

If they cut by 50bp or more, it would confirm that they were keeping to their aggressive pace of policy easing and the market's comfort in Australia being a relatively immune player is overblown.

A 25bp or no cut would give an injection of confidence where now there is only risk aversion and falling yields - and the Aussie dollar would rally sharply.

Anyone out there watching this event risk or currently trading an Aussie-dollar pair now? I'm watching AUDUSD for this event specifically.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

G'day John:
Appears you are anticipating a rise in the Au/Usd from that penant from the chart you posted...do you see that event affecting the Nz/Usd similarly? Appears something is driving it down today though.

Hi John,

Do you have information as to what's the fair value of AUD USD according to PPP basis?

This is an extremely efficient market, so if you mean fair value in the sense of valuing it against a third currency, there is little to no arbitrage opportunity.

If you are indeed talking about purchasing power parity, there a number of ways to calculate such a value. Consumer spending, business spending, growth, trade figures, baskets of goods - many things can be used to determine such a discretionary level of parity.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

As you can probably see from now, the correlation is pretty significant. However, my AUDUSD setup came first with a false breakout. I canceled my orders for a bullish break after the rising leg of pennant gave way. Missed out on that one I guess.

Now I'm waiting to see if there is any momentum that builds behind the short-term bullish break. It looks like first we will pull back to former resistance and then decide direction. As for NZDUSD, still look for 0.6150 (the 50% retracement of the September to October downleg) to fall.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

G'day John - NZ/Us is doing battle with that resistence line right now...appears to be breaking back down through, but just a bit early to tell. It chipped away there at 0.597 for many hours before heading up. As for the coorelation, the Oz is similarly stalled on the drive downward.

This seems the best place to talk about this pair. AUDCAD is building into a wedge and I would think a breakout is likely before this week week is out - or perhaps in the first half of next week.

Considerable event risk from both sides of the pair (Aussie employment tonight and Canadian employment Friday), so there is plenty of pent up energy behind a break.

I'll take the cautious approach as always and wait for confirmation in a higher frequency bar close outside of this wedge.

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__________________
John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

hi john i see you expect the nzd to go to 63-65 or even 67-68 dont you think that a bit high with regard to last nights dow close and outlook for the NZ OCR to drop 75-100 pts regards kiwififty

Easier said than done. Nobody foresee a decline this rapid. If they do, then they will short billions of dollars at 0.90, making lots of money, retire and do not post in this forum. In fact, if anyone is so sure about the rate next year going to 0.40, there's still time to short billions of dollars today to get a bucketload of money (2000+ pips profit). But will you?

Bottom line is what we can do right now, instead of regretting things in the past of what we should or could do. I agree with John K that instead of getting into speculation, money is exchanged each week when paid.

John K and Cmellon
yes, you make a good point.
and I have no real interest in "speculating" in this market.
but, i have never made weekly transfers simply because it costs money.
so..I figured why do it every week if I didn't need to.
and ok...a little laziness is involved as well

but, the fact remains that I have accumulated a considerable amount of NZDs - and it seemed to me to be wise to try and get a general sense of the market before I made any decisions.
and the opinions shared here have been very useful.
my understanding now is that the general trend is down, but with the possibility of temperary upturn over the next couple of weeks.
so, I'll wait and watch.

of course, I now have no idea of what to do with the money when I move it.
I WOULD have given it to my finance guy to invest in stocks.
but now I'm wondering if under my mattress might not be a better idea.
ouch...

Where did I project such levels? Was this in a report?

Right now, I don't see any major trend developing. Overnight Index Swaps show the market is pricing in another 175 bps of easing over the coming 12 months and the Fed is expected to lower another half a percent. These are all fully priced into the market; so there is no surprise if they merely follow through (though if they do it more quickly than is allowed for, there will be adjustment).

Ultimately, I am waiting for either 0.60 or 0.5775 to give to define the short-term trend.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Another breakout candidate among the Aussie crosses that I have been watching: AUDNZD.

This has been an exceedingly annoying pair however. I was range trading it up until two weeks ago when it pushed above 1.1475, at which point I went long on the break. Of course, it stalled and I knocked out at breakeven on one half of my position and took a 50 point hit on the second.

Recently, I have been hesitant to range trade the pair again. Resistance is very clear, but it counters the medium term trend. Support on the other hand is a moving target; so limit entries are out of the question and that also makes setting targets on short-side trades difficult.

Anyone trading this pair successfully recently?

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Dear Jonh K

Hi I am new around here and couldn't find anything related to the title and the closest i got was here... John K, do you have any insights/thoughts as to the AUD/JPY? Is it goingt to be a similar shift pattern to the AUD/US? thanks