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CP29 – NZD/USD:

NZD/USD:

POSTING DATE: 27.01.2022
CORE POSITION TRADE: CP29
DIRECTION: LONG
EXPECTED DURATION: through 2022 thru 2024

 

DEMAND FOR COMMODITIES POST PANDEMIC

The 2020 Covid-19 pandemic saw the FED step on the gas pedal with regards to monetary easing, cutting interest rates and delivering huge amounts of liquidity to the markets via their Repo Operations and Quantitative Easing. As a result, the USD saw safe haven inflows during a very strong RISK-OFF environment. As Covid-19 became more contained and supply chain issues along with wage inflation caught a grip in the U.S. economy the FED has now announced a HAWKISH turn with regards to Monetary Policy starting now.

On the other side after a prolonged period of the RBNZ talking down the NZD, the RBNZ was the first major Central Bank to turn HAWKISH.

Whilst, the RBNZ always wanted to operate within a target range ensuring that export prices remained favourable, given the economic recoveries around the world the RBNZ was forced to start a process of normalization first albeit quite slowly so far.

The Kiwi dollar theoretically should perform better than the USD, but the big RISK factor to consider is that of a move lower in equities and other RISK assets. As we know in this environment the NZD underperforms.

I believe the downside RISK for this pair is for Q1 2022.

I firmly believe that moving forward as commodities will drive economies it is the commodity-based currencies that will benefit the most. Albeit it means that the currency will strengthen as a result.

 

TRADE UPDATE - 14.08.2022:
CP29-2

TRADE UPDATE: 19.12.2022
CP29-NZDUSD

 

TRADE PERFORMANCE SO FAR
CURRENT LIVE & LIMIT ORDERS:

CP29-PAGE1

CP29-3

 

 

 

 

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