Buy EURNZD at 1.6610, stop at 1.6560 and target 1.7200.
Asia’s growth weakness and the Fed preparing for higher rates do not bode well
for risk appetite. EUR’s funding currency credentials make it trade inversely with
risk appetite and conversely NZD would weaken in this scenario due to its foreign
funding needs. The many NZD risk events this week, dairy auction (see Exhibit)
and Fonterra’s revision of its payout forecast should support our trade.