AUD,NZD/Technical Analysis

AUD/NZD: Break above technical resistance should lead to AUD/USD demand

     The break above important technical resistance (hourly highs, 61.8% retracement) opens the way for a full retracement back towards 1.2700. The interbank market is reporting plentiful demand for NZD/USD from real-money funds and if this is really the case, then AUD/NZD gains are more likely to occur through a higher AUD/USD.

  1. aussie’s rise and fall are too catchy. yesterday from 1.0270 it fell to 1.0200 no reason and rise from 1.0200 to 1.0260 again no reason. its better to leave it aside for a while and trade gbp and euro.

  2. Hi Rahul, if AUD/NZD is to move higher there are 2 things can happen; either AUD/USD rises more than NZD/USD or NZD/USD falls faster than AUD/USD. If NZD/USD has lots of buyers, then a rise in AUD/NZD is more likely to come from first example ie AUD/USD rising faster than NZD/USD. Perhaps I’m making it sound more complicated than it is

  3. Rahul,

    to explain sean’s point better always remember that when trading the crosses the currency on the right hand side of the cross is imp. in this case nzd is imp than aussie. if kiwi falls and aussie stays flat still aud/nzd will rise. if kiwi rises and aussie also rises then this pair will remain flat. if nzd rises and aussie falls then aud/nzd will fall.

  4. so tell me if i got this right…both pairs are highly correlated and any market moving catalyst would act on both simultaneously..and create a much larger move in the aussie due to its higher interest rate…(incase of a positive)…would this phenomenon be reversed if the kiwi had a higher interest rate or is this just how the relative pressures on the cross works?

  5. I would not use the interest rate as a reason for larger move in AUD, it could be mkt positioning or mkt sentiment, but yes some factor will likely affect both pairs in same direction, just one more than other

  6. also…if thats the case?..wouldnt it be wrong to say the move in the cross moved the aus/usd and nzd/usd…?…is there a specific reason people would sell the kiwi for the aussie?

  7. There are like you say some pure cross moves, when only the AUD/NZD is moving. This pair is very heavily traded by big institutional players so if you get a pure AUD/NZD move, its certainly quite possible for AUD/USD to go up and NZD/USD to go down. We call it a scissors move.

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