News

Tuesday 22nd July 2008

Ranges
NZD/USD 0.7509-0.7746
AUD/USD 0.9670-0.9840 NZD/AUD 7860-0.7932

LAST WEEKS NEWS

Kiwi spiked on the back of an extremely weak USD. This was pretty much the theme for the whole week until profit taking and a stronger oil price came into play on Friday.

The oil price has dropped 10 percent over the last two days and this has given the perception that the inflation rates will ease with a boost to growth, hence the rally in the big buck.

At home we had stronger than expected CPI data but the break down showed that all the growth was in petrol and food, with the non tradables actually weaker than expected. However all brushed aside by the Dollar moves.

WHAT WE DID

Were short Kiwi, but stopped smartly as it rallied higher.

Trade NZD/AUD from small long side and still holding it.

THIS WEEK'S NEWS

All eyes are on RBNZ this week with the market and US expecting a 25 point easing. This has already seen Kiwi Aussie lower ahead of the statement. However, with the market expecting Bollard to cut, and with more dovish rhetoric, we expect there could be a major market move if he doesn't move and in this weak Dollar environment we could see a nasty spike.

Globally the market is still looking at the US with some major financial companies still in trouble, and with more on the horizon it looks set to be a wild ride.

AUD continues to perform as the stand out buy.

WHAT WE WILL DO

Sell Kiwi on rallies

Buy Dollars on extended dips