It’s pretty difficult to find any good store of value in the current FX market so when one central bank embarks on a modest ‘normalisation’ process and starts raising rates, then their currency is certain to attract plenty of carry-trade followers.
The RBNZ raised the OCR, not unexpectedly, to 3.25% and the market reaction shows that there had been quite a few shorts in play.
- AUD/NZD has triggered downside stops and surely any rallies now back towards 1.0960/70 will attract grateful sellers;
- NZD/USD should now find support on any dips back towards .8550.