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Forex Signal (Wed, July 28 2010, 5:00pm NY Time EST) - NZ RBNZ Rate Decision

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jul 27, 2010.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    RBNZ (Reserve Bank of New Zealand) will be releasing its interest rate decision today and it is widely expected that Gov. Bollard will hike rates today from the current level of 2.75% to 3.00%; here is the forecast:

    5:00pm (NY Time) RBNZ Rate Decision Forecast 3.00% Previous 2.75%
    ACTION: NZD/USD BUY 3.25% SELL 2.75%


    The Trade Plan
    With current forecast from over 14 economists surveyed by Bloomberg agreeing that RBNZ will hike rate during this meeting, possibilities of getting in on a trade after the release is not very likely; however, in the event that Gov. Bollard surprises the market by:

    1. Keep rates unchanged: We should see a sell-off in the NZD immediately, and a spike trade to sell NZD/USD is recommended.

    2. Over hikes to 3.25%: Demand for NZD should soar up, spike trade to buy NZD/USD is recommended.

    For more information on my trading method:
    Henry's Spike Trading Method

    The Market
    NZD has been on a rally partly due to the risk appetite sentiment and partly due to RBNZ's shift in its monetary policy. As it is widely expected for this rate decision to be inline with expectation and hike as expected, market's demand for NZD should remain strong.

    Let me remind everyone that in April, NZIER (New Zealand Institute Of Economic Research) stated that there was no need for RBNZ to raise interest rates before September of 2010, and according to the same article, New Zealand’s economy will only grow a modest 3% this year, making a pre-emptive rate hike completely unnecesary…

    This sentiment was echoed by Governor Bollard's recent comment in June 10 that GDP is expected to be at 3.1% for 2010. However, if we look at recent export activities on dairy products, a 26% increase in May, compared to a year ago, is should be adding some optimism in the economy.

    Considering the broader market, Credit Suisse is predicting a 125 basis points hike on RBNZ for the next 12 months, therefore it is very likely for RBNZ to hike rates as expected and this tightening policy should continue on until the next meeting.

    [​IMG]
    Courtesy of Bloomberg

    Additional Thoughts
    NZD is a very slow moving currency and for a news of this caliber, decent retracements are not likely. Considering the expectation for this release, if we do get an "as expected", market will be focusing on the accompanied statement, and if Bollard cautions the market about a possible pause, expect to see huge drop in NZD. If the opposite is true, Bollard remain bullish, then NZD may gain more ground... The most likely scenario is that Bollard reiterates recent rhetoric and market responds with muted reaction...

    Also 5:00pm market is usually low in liquidity. Unless we get a surprise, it's probably best to stay out...

    Pre-News Considerations
    If NZD/USD drops to the support area, such as 0.7230 level, I would buy it and close before the 5pm betting on the bullish sentiment. But I think the AUD/NZD pair may be the better choice because while RBNZ is expecting to hike interested rate, RBA is expected to leave it unchanged next week. We should see a slow but steady drop in the pair, and a spike up to the 1.2300 level should provide safe SELL that could go from 100 to 300 pips of profit, depending on market sentiment...

    For more information on history charts and data of RBNZ Rate Decision...


    Thanks,


    [​IMG]
     
    #1 Henry Liu, Jul 27, 2010
    Lasted edited by : Sep 8, 2016
  2. CTGUY

    CTGUY Recruit

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    Thank You

    Thank you Henry for your valuable postings and insight into upcoming fundamentals. Please continue sharing your thoughts and expertise to our group. I could thank you everyday on here if I could.

    CTGUY
     
  3. Vegas

    Vegas Private, 1st Class

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    Thanks for AUD info Henry.

    With CPI not meeting expected level there was a spike down in AUD/USD...traded exactly as you predicted...thanks Henry:)
     
  4. Henry Liu

    Henry Liu Former FPA Special Consultant

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    Since you brought it up, I am expecting to see at least 8860 or below for the AUD/USD in the next few days.

    Credit Suisse is pricing in about 16% of rate hike on August 3, from 31% prior to the release, needless to say, AUD/USD should drop and pre-news sentiment should be a SELL SELL SELL on AUD.
     
  5. rider

    rider Private

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    Aud/nzd

    HI Henry thanks for the insight on NZD/USD. In your opionio, can you comment on AUD/NZD in greater detail? I be very keen to trade on that CCY to leverage on the wide spread and volatility during news release.

    Thanks
     
  6. digital_soul

    digital_soul Private, 1st Class

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    Henry

    Please elaborate on your "spike trading" method. Its quite obvious that a human doen't trade the numbers. The spike is too quick. Obviously the billion dollar investors like banks and hedge funds have already automated the process with a ruleset on a computer and have access to the data quicker then any of us have access to.

    I know Crazy Cat uses SNW to trade the spike which has a software to fill a trade based on a ruleset. Which makes sense. But I'm curious how do YOU trade the spike exactly. It seems the squarkbox would be useless in this as its still too slow and relies on human intervention and its hard to tell what exactly tradethenews.com does because they seem so secreative.

    So please let us know how to trade the spike exactly, or at least, with better detail.

    Regards
    Sow
     
  7. Simon Edwards

    Simon Edwards Corporal

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    I'm currently working on some software to do exactly this and i will e looking for Beta Testers shortly ;)
     
  8. Winnie731

    Winnie731 Recruit

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    Real time forex News

    What real time forex News Website do you looked concerning latest Forex News releases?

    Breaking Forex News the very second the Forex News Release occurs?

    Wenona

    :)
     
    #8 Winnie731, Jul 28, 2010
    Last edited: Jul 28, 2010
  9. kingbay

    kingbay Recruit

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    Hi Henry, really thank for your info. by that hope you can stay along with us. thankss
     
  10. digital_soul

    digital_soul Private, 1st Class

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    you need to pay for that buddy - go and google "secret news weapon"
     

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