Nzd.usd

[peat]

yes strong fundys for sure.

[arco]

Hi All

Refer to chart in post 826.....

...............this is the continuation chart which shows if in the small blue Gartley (50-786) the 'b' leg is complete then there is the potential for a fall to the boxes below where we have a confluence of targets. 50% of the previous up wave (red Gartley) may be a point to look towards some support coming in. There could also be an element of support to break around .7560 where 2 old uptrend line merge.

After this event plays out expect the possibility of a reversal and a move further north IMO

rgds - arco

Well as ocassionally happens Gartleys turn into BFs.

Woke up to find I have been taken in short, and currently +90

[peat]

kiwi has been ranging for a few months now between .75 and .79 , possibly due for a buy again anytime

Moreover, a number of commentators make the point that if New Zealand's economy is threatened or actually softens, the Reserve Bank has plenty of scope to cut interest rates to get it moving again.
However, money markets are not pricing in significant expectations of such cuts this year. Indeed at least some market watchers such as Westpac chief economist Brendon O'Donovan are predicting further interest rate increases.
However Weldon sees the prospect of a continued hawkish stance from the RBNZ at the same time the US Federal Reserve is slashing interest rates to ward of recession as presenting perhaps the most worrying economic risk.
"If you were to see a situation where US interest rates fell, and ours rose and that differential got even bigger than it is now, you could see our exchange rate sit above US80c for a good period of time and that would rip the guts out of the export sector."

[peat]

This is what academics write....

http://www.rbnz.govt.nz/research/dis...rs/dp08_02.pdf


A lot of complicated maths but I'm not sure it was all worth it - the final paragraph conclusion doesnt really say much


5

Conclusions

This paper considers how certain data and monetary policy surprises have influenced the New Zealand dollar since 2000. As part of the investigation of the impact of monetary policy surprises, we rely on a variable that is not published (or even internally produced) by most central banks, namely the Reserve Bank of New Zealand’s forward interest rate track. In addition, we consider whether difference sources of announcements that have a bearing on the exchange rate, both of the verbal and quantitative varieties. We conclude that news does affect the exchange rate.

In particular, we find that ‘bad’ inflation news, that is, an expectation

of a rise in future inflation, is ‘good’ news for the exchange rate, a finding that mirrors the one reported by Clarida andWaldman (2007).

More importantly perhaps,we do not conclude that the publication of an interest rate track represents central bank transparency gone too far insofar as the surprise element of such data dissipates rather quickly. Other news events, especially macro data announcements such as developments in the current account, potentially have a much larger impact on the exchange rate. We also find that the RBNZ has done a good job of minimizing the impact of surprises but that monetary policy announcements tend to have a permanent effect on the exchange rate. We take this as evidence that the RBNZ is credible. The evidence in this paper relies on an event study approach.
It is conceivable that a time series approach might yield additional insights into the high frequency determinants of the exchange rate. We leave this extension to future research.

[Bilo]

This is what academics write....

Conclusions

This paper considers how certain data and monetary policy surprises have influenced the New Zealand dollar since 2000. As part of the investigation of the impact of monetary policy surprises, we rely on a variable that is not published (or even internally produced) by most central banks, namely the Reserve Bank of New Zealand’s forward interest rate track. In addition, we consider whether difference sources of announcements that have a bearing on the exchange rate, both of the verbal and quantitative varieties. We conclude that news does affect the exchange rate.

More importantly perhaps,we do not conclude that the publication of an interest rate track represents central bank transparency gone too far insofar as the surprise element of such data dissipates rather quickly. Other news events, especially macro data announcements such as developments in the current account, potentially have a much larger impact on the exchange rate. We also find that the RBNZ has done a good job of minimizing the impact of surprises but that monetary policy announcements tend to have a permanent effect on the exchange rate. We take this as evidence that the RBNZ is credible. The evidence in this paper relies on an event study approach.

It is conceivable that a time series approach might yield additional insights into the high frequency determinants of the exchange rate. We leave this extension to future research.

PC crappaid for by us

Weldon summed it up in the herald this morning. Continuing the hawkish interest rate policy will sell NZ to foreigners as happened after the 1987 crash. Clearly since we stopped fixing the exchange rate, the RBNZ should at least set interest rates against international players - they have ceased to be a unique control of domestic activity or prices.

They are working on a dead paradigm. High interest rates contribute to domestic inflation. NZ's world beating interest rates rob kiwis to pay foreigners, and make kiwi companies uncompetitive because their cost of capital is prohibitive. Hence to survive they must go overseas and eventually the jobs go too. An efficient capital system is essential. The NZX is dying (actually a bit like the the US recession - already happened just not declared yet)

Control of the NZ economy has to be through balanced financial measures designed to maximise NZers Long term wealth (in the widest sense). Screwing up interest rates until the ship sinks is dumb. Jumping on band wagons like Kyoto without being able to negotiate terms appropriate to us is dumb - our delay costs us and the world nothing.

Items in finite supply will appreciate in value. Oil, water, food, useful energy, good land, nice places to live, etc. NZ has these in bucket loads but we continue to go backwards against others in the OECD. The trick to me seems to be to direct capital and other resources into productive activity. Interest rates can't do that on their own. Our whole society becomes more and more "short term focussed" the higher our interests rates go. You don't need economic consultants to improve the situation. A little applied common sense would go a long way.

(Cullen has killed the NZ economy. Sqeezed the life blood out of it. Perhaps his fund can now by NZ back although that would be contrary to declared intention and therefore not PC. One assumes that he will continue to send more of our devalued currency overseas to support their economies.

The economists will teach in a few years time that previous learned theories were BS and now we have new ones which must be right.
A monetarist will have worked out that the money supply has been increasing through these margin facilities, and dodgy credit schemes, Japan's zero interest rates and carry trades, every economy in the world printing cash, all contributing to asset inflation in those countries relying on state of the art economic theories and the dying concept where supply always increases to meet demand and lower prices.





On a similar vein...
I liked an article from a foreign academic (unfortunately I lost the reference and the full article is a bit big to post) "

Some Aspects of the Future Supply of Oil
Professor Ferdinand E. Banks
January 18, 2008
The University of Uppsala, Uppsala Sweden
The School of Engineering, Asian Institute of Technology, Bangkok Thailand "

"Saudi Arabia is still regarded as the primary exporter of oil to the main oil importing countries, and my contention both here and elsewhere is that a demonstrable willingness on their part to steadily increase output over the foreseeable future is perhaps the most bizarre fantasy ever put into circulation by the International Energy Agency (IEA)."

He contends that the Arabs are looking for long term wealth and will maximise their oil production to that extent.


Smacks of "a little bit of work life balance" economics to me. The more pay to the working wealthy implies the less work they need to do. The more money your house earns the less productive work you need to do...the higher the price people will pay for oil, the less you need to pump.


Anyway, one academic coming up with something worthwhile, more than we see from these guys for the RBNZ. What question were they asked to answer?

[Bilo]

This is what academics write....

Conclusions

This paper considers how certain data and monetary policy surprises have influenced the New Zealand dollar since 2000. As part of the investigation of the impact of monetary policy surprises, we rely on a variable that is not published (or even internally produced) by most central banks, namely the Reserve Bank of New Zealand’s forward interest rate track. In addition, we consider whether difference sources of announcements that have a bearing on the exchange rate, both of the verbal and quantitative varieties. We conclude that news does affect the exchange rate.

More importantly perhaps,we do not conclude that the publication of an interest rate track represents central bank transparency gone too far insofar as the surprise element of such data dissipates rather quickly. Other news events, especially macro data announcements such as developments in the current account, potentially have a much larger impact on the exchange rate. We also find that the RBNZ has done a good job of minimizing the impact of surprises but that monetary policy announcements tend to have a permanent effect on the exchange rate. We take this as evidence that the RBNZ is credible. The evidence in this paper relies on an event study approach.

It is conceivable that a time series approach might yield additional insights into the high frequency determinants of the exchange rate. We leave this extension to future research.

PC crappaid for by us

Weldon summed it up in the herald this morning. Continuing the hawkish interest rate policy will sell NZ to foreigners as happened after the 1987 crash. Clearly since we stopped fixing the exchange rate, the RBNZ should at least set interest rates against international players - they have ceased to be a unique control of domestic activity or prices.

They are working on a dead paradigm. High interest rates contribute to domestic inflation. NZ's world beating interest rates rob kiwis to pay foreigners, and make kiwi companies uncompetitive because their cost of capital is prohibitive. Hence to survive they must go overseas and eventually the jobs go too. An efficient capital system is essential. The NZX is dying (actually a bit like the the US recession - already happened just not declared yet)

Control of the NZ economy has to be through balanced financial measures designed to maximise NZers Long term wealth (in the widest sense). Screwing up interest rates until the ship sinks is dumb. Jumping on band wagons like Kyoto without being able to negotiate terms appropriate to us is dumb - our delay costs us and the world nothing.

Items in finite supply will appreciate in value. Oil, water, food, useful energy, good land, nice places to live, etc. NZ has these in bucket loads but we continue to go backwards against others in the OECD. The trick to me seems to be to direct capital and other resources into productive activity. Interest rates can't do that on their own. Our whole society becomes more and more "short term focussed" the higher our interests rates go. You don't need economic consultants to improve the situation. A little applied common sense would go a long way.

(Cullen has killed the NZ economy. Sqeezed the life blood out of it. Perhaps his fund can now by NZ back although that would be contrary to declared intention and therefore not PC. One assumes that he will continue to send more of our devalued currency overseas to support their economies.

The economists will teach in a few years time that previous learned theories were BS and now we have new ones which must be right.
A monetarist will have worked out that the money supply has been increasing through these margin facilities, and dodgy credit schemes, Japan's zero interest rates and carry trades, every economy in the world printing cash, all contributing to asset inflation in those countries relying on state of the art economic theories and the dying concept where supply always increases to meet demand and lower prices.





On a similar vein...
I liked an article from a foreign academic (unfortunately I lost the reference and the full article is a bit big to post) "

Some Aspects of the Future Supply of Oil
Professor Ferdinand E. Banks
January 18, 2008
The University of Uppsala, Uppsala Sweden
The School of Engineering, Asian Institute of Technology, Bangkok Thailand "

"Saudi Arabia is still regarded as the primary exporter of oil to the main oil importing countries, and my contention both here and elsewhere is that a demonstrable willingness on their part to steadily increase output over the foreseeable future is perhaps the most bizarre fantasy ever put into circulation by the International Energy Agency (IEA)."

He contends that the Arabs are looking for long term wealth and will maximise their oil production to that extent.


Smacks of "a little bit of work life balance" economics to me. The more pay to the working wealthy implies the less work they need to do. The more money your house earns the less productive work you need to do...the higher the price people will pay for oil, the less you need to pump.


Anyway, one academic coming up with something worthwhile, more than we see from these guys for the RBNZ. What question were they asked to answer?

[peat]

on the 3 hour chart , technically (using a gartley approach) , the kiwi and the ozzie are buys with stops below .75 and .868

heres the chart for the kiwi - the bullish gartley is close to the ideal scenario with a .618 retracement followed by a rally and then another retracement to .78. Timewise the gartley is a bit stunted but price should always overrule time. The only other negative is that an AB=CD would take the kiwi down to .7477

I think that arco's advice might be good here i.e to wait for confirmation of an uptrend as the size of the pattern is large enough to still make it tradeable when it gets going , tho I have a very small ozzie long already with more toe dipping a bit lower.

[arco]

Morning Peat

The Kiwi idea looks reasonable as I see the action might try a
test of the broken TL (and 200 sma) before falling to circa 7288 perhaps.

rgds - arco

[peat]

ok so you dont think its going to go as far as I was..... still if it was traded with a rising stop could still produce useful pips

interestingly I already had a fib level with a 261 extension at your 7288 level

[arco]

Peat

Trailing is a good idea IMO.

Perhaps 7750+/- is possible if there is a trendline intersect.

arco +