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Trading NZD M3 Money Supply

  • #1
  • First Post: Sep 27, 2006 5:20pm Sep 27, 2006 5:20pm
There could be a could trade here later tonight (23.00 EDT). The consensus is for a lessening of the money supply, which has an inflationary effect on the currency. What is interesting, is that NZD has sold off (de-flated) and is sitting around 6560 as of 18.00 EDT. If the number comes out on consensus or better and the Kiwi is sitting at this level at 23.00 EDT, there could be a nice potential for a pretty good up spike in the currency. I straddle reports like this myself and i've done pretty well with NZD trades in the past.

For all of the traders who have fears about slippage, etc, the NZD trades work well, as there is probably no one on the desk at that time and the trades are likely to be automated.
  • #2
  • Sep 27, 2006 5:24pm Sep 27, 2006 5:24pm
Quoting NewstraderFX
There could be a could trade here later tonight (23.00 EDT). The consensus is for a lessening of the money supply, which has an inflationary effect on the currency. What is interesting, is that NZD has sold off (de-flated) and is sitting around 6560 as of 18.00 EDT. If the number comes out on consensus or better and the Kiwi is sitting at this level at 23.00 EDT, there could be a nice potential for a pretty good up spike in the currency. I straddle reports like this myself and i've done pretty well with NZD trades in the past.

For all of the traders who have fears about slippage, etc, the NZD trades work well, as there is probably no one on the desk at that time and the trades are likely to be automated.
just out of curiosity, what do you expect it to do?
  • #3
  • Sep 27, 2006 5:29pm Sep 27, 2006 5:29pm
Quoting NewstraderFX
For all of the traders who have fears about slippage, etc, the NZD trades work well, as there is probably no one on the desk at that time and the trades are likely to be automated.
But not with IBFX.

IBFX has implemented something that kills off straddlers.
1) they widen the spread which makes your positions auto close upon entry
2) they freeze the price
3) therefore, they have the option to either SLIP you or tell you that your order did not touch (ie, gapped through it)

Just be carefull straddling news with IBFX - it dont work with them anymore
  • #4
  • Sep 27, 2006 5:32pm Sep 27, 2006 5:32pm
Just yesterday, the NZD had a huge drop. I think this is trend is going to happen. I think this news will cause a drop also, but there will also be a fade to trade, IF the news affects the currency.

If anyone is going to straddle, make sure its 15-20 pips away from the actual numbers, NZD is known to widen during news times (all depends on your broker).
  • #5
  • Sep 27, 2006 5:39pm Sep 27, 2006 5:39pm
Quoting NewstraderFX
There could be a could trade here later tonight (23.00 EDT). The consensus is for a lessening of the money supply, which has an inflationary effect on the currency. What is interesting, is that NZD has sold off (de-flated) and is sitting around 6560 as of 18.00 EDT. If the number comes out on consensus or better and the Kiwi is sitting at this level at 23.00 EDT, there could be a nice potential for a pretty good up spike in the currency. I straddle reports like this myself and i've done pretty well with NZD trades in the past.

For all of the traders who have fears about slippage, etc, the NZD trades work well, as there is probably no one on the desk at that time and the trades are likely to be automated.
What broker are u with?
  • #6
  • Sep 27, 2006 5:49pm Sep 27, 2006 5:49pm
I'm currently with Deutsche Bank. At this time they have fixed spreads, although there are some rumors going around that this may change in the near future. We'll have to see.
  • #7
  • Sep 27, 2006 5:59pm Sep 27, 2006 5:59pm
[quote=hunter101]Just yesterday, the NZD had a huge drop. I think this is trend is going to happen. I think this news will cause a drop also, but there will also be a fade to trade, IF the news affects the currency.

There is one extra thing that we should be keeping in mind here. It is in the interest of carry traders to push the Kiwi higher, while they are holding their positions. Then, when their positions have been closed, it is to their advantage to have the Kiwi drop, so that they can buy it cheaper.

Now, has this happened recently and is this the cause of the recent Kiwi slide. I wish I had that information in hand; I can only go by the ancedotal evidence.

If you take this all in, an excellent trade could be shaping up. We have a recent drop in the Kiwi, in the face of a Kiwi + report. We have the carry traders, who may be getting ready to buy and drive the Kiwi up to improve the positions of their carry trades. It's even more interesting that this has all happened at the end of the month. Again, I don't have direct knowledge, but could it be possible that the carrry traders have sold off their positions to lock in their end of the month profits and are re-positioning themselves? we'll see what happens.

It would also be wise to watch the Kiwi in the hours leading up to the report. It's sitting at about 6570 now. A rise to the 90 level could indicate a buy, as traders may be "buying in", anticipating the NZD+ report.
  • #8
  • Sep 27, 2006 6:15pm Sep 27, 2006 6:15pm
Nice comments on the NZD NT.

I think i am going to straddle 15 pips with a stop limit of 20. Hopefully the spread for this wont be over 15 (or 20, like the trade balance on monday night).

Ill be also waiting for the fade, if there is going to be one.
  • #9
  • Sep 27, 2006 6:19pm Sep 27, 2006 6:19pm
You may also want to think about buying the Kiwi just before the report and taking a sell entry 15 pips below, but I would only do that if it hasn't appreciated by then.
  • #10
  • Sep 27, 2006 6:53pm Sep 27, 2006 6:53pm
The suspense is killing me...

When do we get the numbers? =)

Anyone thinking of NZD+ result? I was looking at the last current accounts and trade balance for clues, i'd rather go short seeing how bad these indicators came out a few days ago.

Anyways, I went short 0.6564 with a small lot and keep fingers crossed for a dip to 0.6534.

BTW. NZ just announced that they prefer not to raise rates till 2008 and was telling others to be not-surprised if NDZUSD drops to 0.5... Hmmm.. Now why would investors like to invest in there anymore? If I invested USD100M now, I'd get NZD152M now. And in 2008 when I want to repatriate money back home, my NZD152M investment would be like USD76M! I surely wont like to invest in that scenario.
  • #11
  • Sep 27, 2006 7:33pm Sep 27, 2006 7:33pm
That may indeed be true for the future...however, the rates being where they are today-the carry trades are still very profitable. These positions are probably closed on a month to month basis and the carry traders will know about any rate decrease way before it happens. I doubt they're holding those kind of long term positions.
  • #12
  • Sep 27, 2006 7:49pm Sep 27, 2006 7:49pm
Quoting BurgerKing
BTW. NZ just announced that they prefer not to raise rates till 2008 and was telling others to be not-surprised if NDZUSD drops to 0.5...
the NZD fin minster said no more interest rates raise, NZD could drop to 40 cents, hedge funds are the reason for the NZD rise

http://www.bloomberg.com/apps/news?p...efer=australia
  • #13
  • Sep 27, 2006 8:07pm Sep 27, 2006 8:07pm
Hedge funds appear to be ``taking short-term positions'' in the dollar to take advantage if New Zealand's relatively high interest rates and ``betting they can get out in time and not lose'' when the currency declines, Cullen said in an interview in London yesterday. Investors shouldn't forget the dollar had dropped below 40 U.S. cents in the past and ``would be unwise to bet that that couldn't happen again.''

Reserve Bank Governor Alan Bollard on Sept. 14 kept the benchmark interest rate at a record 7.25 percent and said he is unlikely to lower borrowing costs ``for a considerable time'' because of the outlook for inflation.

he doesn't expect the Reserve Bank to intervene in currency markets to halt the currency's appreciation.

No Intervention

``There's not a lot we can do because clearly we don't intervene and try to push down the dollar,'' he said. ``That's the domain of the Reserve Bank but I can't see the Reserve Bank doing that in this particular situation.''

Hedge funds, loosely-regulated pools of capital catering to wealthy investors and institutions, bet on movements in asset prices to make money. They sometimes invest enough to move financial markets, most famously illustrated by billionaire George Soros's bet in 1992 that the U.K. would pull out of the European Monetary System, triggering a 20 percent plunge in the pound. Soros made $1 billion for his Quantum fund on the wager.

The hedge fund carry traders really have control of this market...I really think they can comtrol the currency almost at will...
  • #14
  • Sep 27, 2006 9:57pm Sep 27, 2006 9:57pm
When is the number coming out? 2 min has past.
  • #15
  • Sep 27, 2006 9:58pm Sep 27, 2006 9:58pm
looks like its delayed, this happens sometimes on this number...
Relax and be happy.
  • #16
  • Sep 27, 2006 10:00pm Sep 27, 2006 10:00pm
Crap, hehe, i was basically shaking too, waiting for the numbers. Ill keep my straddles for a few more min before i cancel them.
  • #17
  • Sep 27, 2006 10:01pm Sep 27, 2006 10:01pm
this is so funny, you know you can hear a pin drop at every forex trading room right now
Relax and be happy.
  • #18
  • Sep 27, 2006 10:03pm Sep 27, 2006 10:03pm
This report is not on the FXstreet.com calender or on the forex.com calender...what happened?
  • #19
  • Sep 27, 2006 10:04pm Sep 27, 2006 10:04pm
its coming, its just a few minutes late...
Relax and be happy.
  • #20
  • Sep 27, 2006 10:05pm Sep 27, 2006 10:05pm
Well, did someone in New Zealand get lost with the results or what. They're 10 minutes late. Gee
Fdisk Please I just want a few pips. Is that too much to ask?
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