"Carry friendly trade"
Deutsche Bank is jumping on the carry trade frenzy with a long position in the NZDUSD at 0.7200. The target is 0.7500. The stop loss is 0.7000. So risking 200 pips to make 300 pips.
The rationale includes:
- Carry trade flows. See no global event risk that could disturb the "carry party" in the near term.
- They expect some reallocation to the kiwi as investors re-consider RBNZ easing.
- They see little downside risk in this weeks employment data. The employment data will be released on Tuesday (NY)/Wednesday in New Zealand with expectations for QoQ employment change of +0.6% (vs +0.9% last quarter) and 5.3% rate vs a revised 5.2% rate last quarter.
TECHNICAL LOOK
If I were to look at the NZDUSD, the 50% of the range this month comes in at 0.7211. The 100 hour MA is also at that level. Today, the price traded above and below that MA line. The market is unsure. If the price is to go higher I would like to see the price move back above the 100 hour MA and the 50% at the 0.7211 and stay above. If that move does not come before the Employment report (6:45 PM ET on Tuesday), I would look to buy after the event on a bullish move. That may come above the 0.7211 level but I am not looking guess the data and the price action.
If the price in the new trading day moves back above 0.7211 area, it might be an opportunity for a trade. If buyers come in ok, but to make a "bet" on employment? That is not my idea of a great trade.
