Nzd.usd

[bogus1]

anz commentary
Outlook

Currency: Target remains 0.8154 for the NZD but risks of a correction lower have increased substantially with
the brief move above 0.81 yesterday. USD index continues to remain above 80 awaiting housing data tonight.

Bonds: Expect local yields to open unchanged.

Today: No local data today. Australian Q2 CPI due at 1330 NZST.

Review

Currency: Another stellar performance from the NZD yesterday as it eliminated stop loss buying orders with
ease. Further yield demand was evident although this began to wane slightly after the move above 0.81.

Fixed Income: US Treasuries posted modest gains as concerns over housing and riskier credit markets lend
support to bonds. A US$6b auction of 20-yr TIPS met with decent demand.

Equities: US stocks fell over 1 percent as housing concerns dragged financial and homebuilders stocks lower,
and a fall in oil prices weighed on energy stocks.

Commodities: Oil prices fell for a third day on speculation that US refineries are increasing their fuel production
and an official from Iran’s Oil Ministry said OPEC would raise output if required. Gold prices rose on the back of
USD weakness.

Text Box: 25 July 2007

MAJOR MARKET MOVERS
(0715 NZ TIME)

BNZ COMMENT


The NZD/USD broke above 0.8100 yesterday and went
on to record an intra-session high of 0.8110– its highest
level since January 1982.

Over the past day or so, the NZD/USD has been
propelled to the fresh post-float highs by a combination of
broad based USD weakness and heightened speculation
about the RBNZ raising the OCR to 8.25% on Thursday.
The positive NZD sentiment was also helped by the
announcement of EIB’s NZ$400m 5-year Eurokiwi issue.
Indeed, retail accounts out of Asia continue to have an
appetite for NZD.

In addition, the NZD/USD has also been propped up by
very solid demand for NZD/AUD. It appears that a variety
of short-term leverage accounts have been squaring up
short NZD/AUD positions ahead of Thursday’s OCR
Review. The NZD/AUD climbed over 0.9100 yesterday,
but has failed to break above 0.9160 (large stops are
rumoured above this level).

Despite the strong rally seen in the NZD/USD yesterday,
the upward momentum appears to be stalling. NZD/USD
failed to break through 0.8100 last night. Indeed, model
funds and custodial accounts have been noted NZD/USD
sellers. Furthermore, the lacklustre performance of US
equities (S&P500 currently down 1.98%) has also
weighed on carry trade sentiment, and selling of
NZD/JPY has added to the downward pressure on
NZD/USD.

Today the Australian CPI release (due 13:30 NZ time) will
be the main focus. A strong underlying CPI out-turn
(0.8%q/q or greater) will likely heighten speculation about
the RBA raising rates on August 8. Since the RBNZ is
widely expected to hike this week, increased
hawkishness towards the RBA could well prompt another
round of NZD/AUD selling (particularly since the cross
has repeated failed to break above 0.9160).

[bogus1]

possibility of a look at a short , major event risk tommorow with rate increase more or less full priced in, big downside risk to no hike and also possibilty of rbnz dumping kiwis onto market could be interesting

[FTG]

Finally stopped out on Long position. Nice little run that was!
Next 24 hrs are going to be quite interesting starting off with RBA decision in next minute or so.
Currency markets seemed to have factored in a rise, money markets aren't so sure.
The quiet political pressure on Bollard is great now. My punt is he won't rise - (this time!)

[bogus1]

i agree, i reckon its a real close call,the rbnz are in a interesting position where they know what there going to do ie raise or not raise and so could intervene in a reduced liquidity enviroment as i feel some money must have been taken out of kiwi. so how you going to trade it??

[FTG]

Albeit I take note of the fundamentals and form opinions, I'm more enclined to take a wait & see approach and see what the market says and then make a move accordingly.

[Steve]

Short NZD @ 8053; stop 8130

Let's see how it plays...

[FTG]

Good luck,

I have just made a similar order - my stop is a little tighter however; 8095. Goes through there and I reckon a new high will follow shortly.

[Steve]

quote:Originally posted by FTG

Good luck,

I have just made a similar order - my stop is a little tighter however; 8095. Goes through there and I reckon a new high will follow shortly.

My guess is that any rate hike is already factored into the price and my stop allows a for a new high to be unsuccessfully tested prior to the announcement. If there is a new high, I will no doubt be taken out.

I trade through CMC, who do you use?

[bogus1]

hike 25 bps

[Hoags]

Went the other way long, think that the OCR rise is just another big green light for the traders. Spiked and dropped hard looks like its bouncing back strong tho.