Thoughtful reasoning of AUD and NZD | Forex Factory

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Thoughtful reasoning of AUD and NZD

  • #1
  • First Post: Sep 28, 2016 3:56am Sep 28, 2016 3:56am
So these are the last 2 standing currencies in developed countries that pay a yield higher than other countries. Can anyone explain the reasoning behind the moves of these dreadful FEDs? I belive these 2 countries are some of the worst and overvalued currency in the world. I would like others to change my mind. Please help with this thread so I can understand the other side of the trades better!
  • #2
  • Sep 28, 2016 4:03am Sep 28, 2016 4:03am
Last NZ trade deficit one billion two hundred and fiftysix million hmmmmmmmmmm has more effect than $1256000 posted monday suppose no one else read that oh well um sorry cant help you with youre question cause im confused
  • #3
  • Sep 28, 2016 5:25am Sep 28, 2016 5:25am
Quoting Mm8
Last NZ trade deficit one billion two hundred and fiftysix million hmmmmmmmmmm has more effect than $1256000 posted monday suppose no one else read that oh well um sorry cant help you with youre question cause im confused
LOL... how about the part where. they can't lower the interest fast enough, because the housing market is heating up too much due to buyers from China. They don't know how to utilize foreigner tax or anything. At the end of the day, they have to find a Chinese buyer to buy all their properties.
  • #4
  • Sep 30, 2016 5:20am Sep 30, 2016 5:20am
So 6:19 PM SG time. Commodities prices are up all of sudden? except oil. Is this a wake up call? USD is up ut not against GBP and NZD. what gives?
  • #5
  • Sep 30, 2016 5:24am Sep 30, 2016 5:24am
hello forex factory members, I trade based on present market condition. Which is understanding where is the market right now and what it is doing and what it is likely to do. Because market moves from one level to another . from one support level to other . from one support level to resistance level ..vice versa . With this analysis you can choose right instrument to trade.
  • #6
  • Oct 2, 2016 5:19pm Oct 2, 2016 5:19pm
Quoting vb2821987
hello forex factory members, I trade based on present market condition. Which is understanding where is the market right now and what it is doing and what it is likely to do. Because market moves from one level to another . from one support level to other . from one support level to resistance level ..vice versa . With this analysis you can choose right instrument to trade.
could you tell me why NZD is trading near yearly high when the Gold Price is near its high? Yes I understand that gold is a commodity, however, gold is usually up based out of fear or for inflation. Which is neither the case.
  • #7
  • Oct 4, 2016 7:02am Oct 4, 2016 7:02am
Hello,
Yes there are few developed currencies that did well against the US dollar recently, it includes AUD, NZD and JPY. However, if we discussed about the other currencies EUR, GBP and CHF they failed to show ignite. Certainly, the US Fed was among the one of the biggest factor that was impacting the currencies, however there are different set of factors that impact the various currency.
IF we talk about AUD & NZD, the two biggest factors aside fed impacting its value:
1. Commodities prices
2. Economic situation

If you ignore the first month of this year, the above two factors remained supportive of AUD & NZD. Commodities remained the one of best performing asset this year, as Australia and New Zealand are both commodity export oriented countries, higher commodity prices are good for both the countries.
China is the biggest trading partner of AUD & NZD, after seeing the equity market crash in the first month of this year, the economic situation more & less stabilized in China which acted as catalyst for these currencies.
However, if we talk about the developed currencies like GBP or EUR, these currencies are facing the financial as well as political turmoil in their economies like debt crisis, inflation, growth and Brexit.
So if look in the respective factors, it’s hard to justify that AUD & NZD are expensive among developed countries. If they have performed well with respect to EUR & GBP, then there are underlying reasons to support their appreciations. AUD & NZD are well placed in there of financial as well as political situation.
If tomorrow, fed gives green signal to interest rate hike, AUD & NZD would be the first currencies who would rebound following the financial storm.
  • #8
  • Oct 5, 2016 6:50pm Oct 5, 2016 6:50pm
Quoting olivia.forex
Hello, Yes there are few developed currencies that did well against the US dollar recently, it includes AUD, NZD and JPY. However, if we discussed about the other currencies EUR, GBP and CHF they failed to show ignite. Certainly, the US Fed was among the one of the biggest factor that was impacting the currencies, however there are different set of factors that impact the various currency. IF we talk about AUD & NZD, the two biggest factors aside fed impacting its value: 1. Commodities prices 2. Economic situation If you ignore the first month of...
i agree that they have performed well because the commodity prices have gone up. this week the prices have been rocked and their economi numbers are not that great. mediocore at best. yet, they still cling on because of 2%. i have friends in aud they say their currency is so overpriced, they are just stashing money overseas waiting until it falls back one day to send back. for sure they will make much more money from the principal in doing this instead of the 2%
  • #9
  • Oct 17, 2016 5:05am Oct 17, 2016 5:05am
So the CPI q/q numbers will be announced tomorrow. For some reason there are some buying in the NZD today. Looking back the last 15 quarters, dating back to 2013 only 4 of the 15 qtrs beat and the remaining 11 qtrs missed the estimate. The funny thing is that it was only recently where Wheeler is trying to catch up on lowering the rates. Will likely see this pair at .68 on NZD.USD after the morning news. Good luck
  • #10
  • Oct 26, 2016 1:54am Oct 26, 2016 1:54am
There is a reason why the NZD will start to give ways to show what they will be doing with the interest rates. They will probably lower the interest by more than expected. last surprise before the ultimate crash.
  • #11
  • Oct 26, 2016 8:00am Oct 26, 2016 8:00am
My view was that monetary policy discrepancy among developed countries suggest that money flows to countries that pay higher interest rate.

True or False?

A classical fundamental view isn't it? But my view couldn't possibly be more wrong during extreme conditions.

A picture worth a thousand words.
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No Highs? No Lows? Must be Bose!
  • #12
  • Oct 27, 2016 9:08am Oct 27, 2016 9:08am
Quoting Tardigrade
My view was that monetary policy discrepancy among developed countries suggest that money flows to countries that pay higher interest rate. True or False? A classical fundamental view isn't it? But my view couldn't possibly be more wrong during extreme conditions. A picture worth a thousand words. {image}
wow...that is definitely food for thought. in your opinion. with the lowered interest rates already factored in by 80%. when they do lower it probably wont move the currency much. however, if they keep their tone in place, do you see a squeeze in it?
  • #13
  • Last Post: Oct 28, 2016 2:48am Oct 28, 2016 2:48am
Quoting kingleeny
{quote} wow...that is definitely food for thought. in your opinion. with the lowered interest rates already factored in by 80%. when they do lower it probably wont move the currency much. however, if they keep their tone in place, do you see a squeeze in it?

kingleeny,

Your approach of avoiding confirmation bias by seeking counter-evidence is admirable.

In your first post, an assumption was made:
Quote
"I believe these 2 countries(Australia, New Zealand) are some of the worst and overvalued currency in the world.

By collecting both evidence(economic data) and counter-evidence(overvaluation of some other currencies) relevant to your belief, such belief can be justified.

I think we can both learn a thing or two from the tragic ending of Jesse Livermore- regardless how much he made, premature entry eventually bankrupt him.

Without market giving clear signals though, the only low risk betting I can think of is to buy AUD put.

Still, it's an interesting project. What evidence do you think we should look for to prove Oceania currencies being overvalued?
No Highs? No Lows? Must be Bose!
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