A snippet via Morgan Stanley, one of their trades of the week is to by NZD/USD at 0.6320
- target 0.6580
- and stop of 0.6230
Reasoning(this in summary):
A stabilisation in PMIs last week … continued progress on phase one of a potential US-China trade deal, should provide support for commodities and risk sentiment.
- should weaken USD broadly and support risk- and commodity-sensitive currencies
NZD is best placed to rally
- CFTC data suggests short positioning is the most extreme within G10.
- New Zealand data has also been decent
Meanwhile, should the advance reading of US 3Q GDP come in weaker than market expectations ... USD could see further weakness
- Fed likely cutting rates by 25bp and signalling data dependency this week should not materially affect USD as markets are already pricing in a pause after this cut - with the next cut only priced for April.
The risk to this trade is the Fed being more hawkish than expected or strong US data.
