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Aud Can Do Better Than Nzd In Risk-on

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Nov 06 2020


Commodity currencies have been in a pullback in the last two months, as risk-on trend started slowing down due to higher coronavirus cases and second lockdowns. Australian dollar lost more of the value than NZD when comparing it to USD, but that's normal correlation it seems as shown at AUDNZD vs SP500 chart below. Or, in other-words, AUDUSD can be also much better trade on the long side than NZDUSD when market is positioned for risk-on. So that's one way how to play it, or you just simply go with AUDNZD pair in risk-on, which may not be a bad idea if we consider that there can be some divergence between central banks. Keep in mind that RBA said they will not move to negative rates, while RBNZ it can, so this makes bullish case for the pair which is even more interesting if we consider that stocks can be turning back to ATH following recent bounce.

The AUDNZD pair looks very interesting from a technical perspective as well as it can be finishing a deep three-wave pullback after recent bounce away from the lower parallel trendline support and daily 200SMA. A confirmation, of a bullish resumption would be a break out of a downward channel that can lead to more gains, and potential opportunities on the way up.

Personally, I will also pay attention to AUDUSD as well next week. More about this one in some other article.

I wish you a lovely weekend.
GH

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