This week our forex strategists targeted on the New Zealand This autumn 2024 CPI Report for potential high-quality setups within the New Zealand greenback pairs.
Out of the 4 situation/value outlook discussions this week, just one dialogue arguably noticed each fundie & technical arguments triggered to grow to be potential candidates for a commerce & threat administration overlay.
Watchlists are value outlook & technique discussions supported by each elementary & technical evaluation, a vital step in direction of making a top quality discretionary commerce thought earlier than engaged on a threat & commerce administration plan.
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NZD/CHF: Tuesday – January 21, 2025
NZD/CHF 1-Hour Foreign exchange Chart by TradingView
On Tuesday, our strategists had their sights set on the This autumn 2024 New Zealand CPI report and its potential influence on the New Zealand greenback. Based mostly on our Occasion Information, expectations had been for quarterly inflation to tick up from 0.4% q/q to 0.5% q/q, with the annual charge holding regular at 2.2%. With these expectations in thoughts, right here’s what we had been pondering:
The “Kiwi Climb” State of affairs:
If the CPI got here in hotter than anticipated, we anticipated this might dampen expectations of near-term RBNZ charge cuts. We targeted on NZD/CHF for potential lengthy methods if threat sentiment was web constructive, particularly given SNB Chairman Schlegel’s current feedback about slicing charges and curbing franc power. If threat sentiment turned detrimental, GBP/NZD shorts appeared promising given the BOE’s current dovish shift and weak UK knowledge.
The “Kiwi Collapse” State of affairs:
If New Zealand’s inflation knowledge got here in beneath expectations, we thought this might gas RBNZ easing expectations. On this case, we thought-about AUD/NZD for potential lengthy methods in a risk-positive atmosphere, notably given the RBA’s current hawkish stance. If threat sentiment leaned detrimental, NZD/JPY quick made sense given the excessive expectations of a BOJ charge hike and the yen’s “secure haven” standing among the many buying and selling group.
What Truly Occurred:
The This autumn 2024 New Zealand CPI report got here in barely above expectations:
- Quarterly inflation rose 0.5% q/q as anticipated
- Annual inflation held regular at 2.2% y/y, marginally above the RBNZ’s 2.1% forecast
- Core inflation remained elevated at 3.0% yearly
- Transportation prices had been a serious driver, with worldwide air transport costs up 6.6%
- Housing prices continued to point out stress with rental costs up 0.8% q/q
- Non-tradeable inflation eased to 4.5% y/y from 4.9% in Q3
Market Response:
This final result essentially triggered our NZD bullish eventualities, and with threat sentiment leaning constructive after as there was some degree of Trump tariff concern easing, we although that NZD/CHF had the very best odds of probably constructive outcomes.
Trying on the NZD/CHF chart, the pair really consolidated after the NZ CPI occasion, even after SNB President Schlegel’s feedback about an openness to detrimental rates of interest if want probably added some stress on the franc. It wasn’t till the Thursday session when risk-on belongings started taking a bid, correlating with Trump’s feedback at Davos, the place he referred to as for an finish to the Russia-Ukraine battle, for decrease oil costs, and for the Fed to decrease rates of interest.
Broad risk-on Sentiment carried on via the top of the week, the place NZD/CHF closed slightly below its intraweek highs.
The Verdict:
So, how’d we do? The elemental set off of above-forecast inflation dampened speedy RBNZ charge reduce expectations, and the pair moved increased with rising broad risk-on sentiment as anticipated. Our technical evaluation precisely recognized the R1 and R2 targets as potential areas of resistance, each of which had been examined earlier than the top of the week.
For merchants who merely lengthy positions after the CPI beat the place spent little or no time in detrimental territory and the rise increased was fairly easy, leading to no need for very energetic commerce administration. For our Premium members, we determined to create an instance commerce construction primarily based on a swing timeframe as a information on alternative ways to consider threat and lift consciousness on doubtlessly influential occasions forward, and the result up to now has been web constructive.
General, we predict our unique dialogue was “extremely probably” supportive of a web constructive final result and we hope that was the case for all merchants on the market watching this pair!
