NZD - A disaster waiting to happen - Page 2
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Thread: NZD - A disaster waiting to happen

  1. #11
    Quote Originally Posted by ;
    If New Zealand were to reduce its interest rates significantly, then high-yield seeking money (specifically carry trade) will be pulled out and spent elsewhere, causing the currency to weaken. Is not the current run up in AUD and NZD largely driven by interest rates?

  2. #12
    Curious NZD is becoming too high? NZD is rising because of inflation and the expected (or rumored) rate increase next week. Based on experience, currency drops after an expected rate increase.

    And I do believe that is a tragedy waiting to occur. Once the drama unfolds, all eyes need to focus next week.

    IMO. Max NZDUSD would be 0.7550. But dont go buying hoping it'd top this!

  3. #13
    It is quite heartening to note that folks take fundamentals . Thanks for all of the input. In situations like these where NZD, AUD, EUR, GBP, JPY are in levels that are intense, it is worth it to sit back, examine then trade following the crowd or the so called advisors gurus.

    Lets look at the following example. Boeing Airbus are two chief competitors in commercial aircraft industry. Airbus is having problems have already laid off work force. Over more private corporates place orders for airplanes every year. When an aircraft(hypothetical example) out of Boeing costs 20 million dollars from Airbus costs 20 million euros, then you can reevaluate yourself that company is going down big time. This is what's being represented in Forex Trading. USA its companies are very pleased to maintain the dollar lower get the better of Europeans. But the Japanese are the ones who have understood it quite well, are pleased to see their currency weaken further. The Japanese Govt., Investors Businesses are benefitting.
    A 10%-20% additional tax on foriegn earned profits will considerably impact carry trades, but who is going to bell the. There's so much at stake there are too many large fishes they would never let this happen. So all of this rhetoric is merely an eyewash.

    How when to use this situation to our benefit in Forex Trading is a million dollar question. We need to look to enter before the fall that is free. We should maintain before the event be ready for the rough ride, obviously using minimal risk.


  4. #14
    A move that was powerful was seen by us after NZD CPI Tuesday. It demonstrated to us that many many institutions are long NZDUSD and they're prepared to protect their positions as they believe that this will be going higher, and add to them. We watched NZDUSD fall 30 pips and return to pre existing news prices in a minute. In 20 minutes we watched highs violation along with a new high launch.
    The economic reprocussions are not realized yet, so I believe that this run will sustain to all time highs before falling. When it does fall I don't think that it will fall as quickly as some assume. I think it will selloff as it has after hitting a new high any moment.
    When these sort of things are occurring is when we think it's the end of the world. In a month we will see how it plays out and realize that was the market running its course. The market is very stable.
    There's been a talk of eurjpy falling 1000 pips a day. I think it will begin falling 200-300 pips every day but I don't think we will see gaps. There are many people playing this thing.

  5. #15
    Quote Originally Posted by ;
    but will the large NZD force NZ to a recession? A recession so poor they drop the rates and down comes NZD?
    . . .Does Japan ring any bells?

  6. #16
    Quote Originally Posted by ;
    I had the perfect technical analysis on this(USD/NZD) pair from 3 months ago. Actually caught a drop overnight. But it has not done what it should've because, kept climbing. I'm a-waiting! But it had a good correction for 3 months now.
    Considering that the market did not agree with me, I'm glad to know that at least somebody did!

    Additionally glad that we've got a little thread going. I didn't notice any mention of this pair in the history of FF. Of course, I might have missed something.

  7. #17
    I must preface this comment so please jump in and correct any misconceptions that I might have.

    When the NZD and other carry trade associated currencies are'disasters waiting to happen', isn't the wise thing to start buying puts on the NZD, calls JPY, etc.? It feels like options are the way to allow for a huge upside at a relatively modest cost in case the carry trade will come unstuck one of these days.

    Does anyone have some practical advice about how to execute such a play with options? I started a demo account on OptionsXpress to investigate their offerings, but it seems they just have options over the four pairs (USDGBP, USDCAD, USDEUR, USDJPY) provided by the ISE (who cite on their website which NZD and AUD are planned future offerings). Are there any other brokers out there with offerings that are much more sophistied? (I'd be tempted by SaxoBank, but their minimal balance is a little high for a side-project account)

  8. #18
    Quote Originally Posted by ;
    Since the market did not agree with me, I am pleased to know that somebody did!

    Also glad that we have got a little thread going. I didn't notice any mention of the pair in the recent history of FF. Of course, I might have missed something.
    March 28th I think it was. I am just thankful once I exited to a retrace which I did not enjoy I had second thoughts and decided to not do another entry!

    You're right though. This is a great conversation. A lot of these currencies have had unreal gains and spikes,and I believe NZD had the percentage gainer from the USD.

  9. #19
    Quote Originally Posted by ;
    this is exactly what Vegas needed to say in one of the blogs about carry trading. The day it unwinds, it is going to be hell for a few and lots of cash for others.

    This pair was in buy mode since May 17th, and there has been no push at or outside the initial fib
    We exchanged once on the drop to the first fib, almost got stopped outside, then sold to the rally back for a
    very small reduction.
    But, storm warnings are brewing in this pair which makes it extremely dangerous to be long on fractures.
    I told you before, major news releases all technicals, and on this subject we certainly have any major
    news. For the first time I could recall in a cross, politicians are getting into action. Last week, all hell
    broke loose when a Finance minister in Europe spoke about the EUR/JPY and also the demand for this particular
    cross to stop appreciating because it was damaging European exports. He hinted it will be a topic for
    discussion at the forthcoming G-7 summit in Singapore on September 15 -- 20th.
    Now, the issue here is the fact the entire world is extended EUR/JPY, and for that issue brief the
    Yen in most of the crosses. Yen was the”financing vehicle” for all the carry trades over the last couple
    years. Past history indicates when this carry trade drops out of favor with the hedge fund community it
    will be NASTY. I mean REAL NASTY. Account end nasty. Moves that make you believe your
    machine is broken and can not possibly be appropriate. I'm speaking of anywhere from 500 to 2,000 pips at a
    few days. Moves speculators are killed by that and make each politician joyful at the thought. The last
    indicates this will be the result.
    There are TRILLIONS of dollars worth of those trades on, and if this political talk which started last
    week starts to gain traction along with other politico's in Japan and elsewhere, look out below. I can
    guarantee you, right now, there are lots of hedge fund managers who are very worried about this pair
    and their long positions. When [ not if ] these guys hit the exit button at the same time it can get REAL
    interesting. Your stop, at a scenario like this, is moot. Having a long position, you could very
    readily get filled 700 pips from the stop [ or worse ].
    Let's be clear.
    I really don't know when it will occur -- I only know it will happen. All the dominoes are being put up. The
    politico's are beginning to send the”between the lines” message into the investment community. Right now,
    everyone wants to play fine. But, the cannonball was”shot across the bow”. It's only an issue of
    So, even though we do not have a reversal top above the fib intense, I'm shifting to sell mode in this

    Everybody understands it is going to occur; I heard soros talk of it not long ago. This will be a memorable story that is going to be studied in universities accross the globe for a long time after conveys unwind.
    Awesome stuff right there!

  10. #20
    Not only because USD is weak, but because NZD is completely strong against all other people.

    How can that be? Carry Trades.

    Come OCR (rate hike), RISK AVERSION will come to perform and short it. They'll wait for several hours even days and come back to the table for a different carry.

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