ANZ Morning Focus: FXWW

From the FXWW Chatroom – O/night NZDUSD 6577/6651 NZDAUD 9220/9242
Today NZDUSD 6610/6680 NZDAUD 9210/9250

· NZD participated in an outsized USD move, squeezing out shorts and racing back above 66 cents for a 130pt move on the day
· This represents the biggest NZD move since the RBNZ in August which drove a similar sized move but in reverse (sell off)
· And the biggest move higher since June 2016 (top 8 daily up moves looking at data since 2013)
· NZD’s move kicked off yesterday as Trump stated he had a positive conversation with Xi Jingping re trade and Korea.
· Then we heard China was reportedly open to discussion with the US leader at the G20 (in Argentina from 30th Nov)
· US equities are looking peppy.. potentially the 3rd up day in a row calming vol fears (S&P +0.8%)
· Meanwhile the US 10y yields have eased slightly to 3.13, relatively stable though
· BoE signalled a faster pace of tightening which drove GBP outperformance – but still warned Brexit warrants caution
· See attached for our RBNZ preview for next week – it’s shaping up to be a biggy.
· Today ANZ Consumer Confidence at 10am. Aussie PPIs and retail sales at 1.30pm
· Tonight US payrolls

NZD has finally succumbed to a short squeeze as the USD gets moving and more positive trade headlines hit the screens. With the market still short NZD (on local factors and trade) there is potential for more upside on this move especially for leveraged funds that struggled in October on equities and held their short NZD as a diversifier. With NZDUSD above the downtrend channel res and Oct highs we’d expect these levels to provide support short term down towards 6620. Resistance will be the 100 day m/a at 6670 and the Sep highs at 6700. Payrolls tonight will help set further direction as will any trade headlines. And we now countdown to US-China discussions at the G20 in December.
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