Considerably dovish news from central banks in the US and New Zealand has caused a major stir in the markets. Governor Orr and Vice Chairman Powell both released some reassuring news for the economy in the long term. But what does this mean for USD and NZD?
GBPNZD is a pair that should be on your radar now. The EdgeFinder still scores at a neutral rating of +2, but sentiment could continue to lean more towards a buy (+3 or higher). The kiwi carries one of the highest rates in the market right now, but that could be subject to change.
Governor Orr spoke on monetary policy going forward and mentioned that he sees no need for another rate hike after this 25 bp move. The rate sits at 5.5% and will likely stay there until the RBNZ decides to cut. Meanwhile, countries like UK which suffers from high levels of inflation has a different plan: continue the hikes as needed to reach their target of 2%.
After Jerome Powell spoke yesterday, the dollar saw a spike in bullishness although the statement was very much a mixed one. Although he considered inflation to be "unacceptably high", the need for more hikes has become very muddy.
It appears that Fed officials are split between a continuation or a pause for next month, but the overall sentiment reads lesser confidence in a need for one. The DXY is up with bond yields today, however price is testing a key resistance level on a long term trend line. Today's price action could determine whether or not the pair has completed its move or not.
Kiwi pairs are starting to see a heavy bearish bias from the EdgeFinder after that recent dovish RBNZ news. NZDCHF is one of the strongest sells of the kiwi crosses, however, it is likely that more will start to turn increasingly bearish over time.
We should pay attention to COT and retail. Right now, there's a heavy long bias from the crowd and a mixed reading from smart money. However, we can check COT over time to see where they might be shifting their interest. Both the trend and seasonality are forecasted lower for the month of June, which suggests further downside for the pair.
Retail Spotlight
After taking a look at retail, it's evident that the reversal traders are heavily against the strong moves from kiwi. Although there might be some temporary profitability, it could be limited as smart money will likely be dumping what they have in NZD.
Smart Money Spotlight
Here is smart money getting less and less bullish over time. The bulls are fading on kiwi, and as we approached this week's news, sentiment fell. Based on historical data, we can expect a lower bias going into next week. If that yellow bar on the Currency Pair Bias chart shows up below 0%, that means investors are leaning towards CHF bullishness.
Fundamental Spotlight
When stacked among the rest, USD and NZD are the strongest in terms of funds rates. however, we still need to consider what is to come for the two hawkish currencies. After interpreting the two statement from this week, we can conclude that both the US and New Zealand are near or at the end of their rate hike journey. Investors are now expecting a pause or a cut, but hardly anyone thinks there will be another rise from the Fed or RBNZ.
A1 Edgefinder
AI- Generated Trading Setups
AI-generated bullish/bearish bias setups on forex currencies, gold, & indices.
Just before the scheduled shutdown at 12:01 am on Sunday, Congress voted to extend the deadline for another 45 days. Yields jumped higher to above 5.1% which has remained elevated for some time. As we enter an historically bullish month for the indices, here are some setups on dollar, gold and index setups EdgeFinder Analysis […]
GDP numbers came in lower than expected in the US, marking the third straight drop in economic output. This is usually good news for the stock market indices and gold, however, bond yields continue to hold up above 5.1%. Here are some potential trade setups for both dollar and index longs depending on how the […]
Hi, I’m Nick! I am the founder of A1 Trading, market analyst, YouTuber, and creator of the EdgeFinder software tool. I caught a huge winner on USoil with the help of the EdgeFinder! In this article, I’ll walk you through my thought process behind the trade and how I found this crazy runner! Finding My […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here