ridethepig | Dovish RBNZ Pricing & Commodity Shortages
📍 RBNZ formula
So what are we trading here?
In this position it would be an obvious mistake to not acknowledge risk sentiment worsening over the weekend as cases continue to escalate, clearly the market is exposed to the storm (that is to say the series of localised lockdowns are a done-deal, the only question remains whether it becomes more widespread).
On the monetary side, the correct flow to shelter from if things materially worsen (sadly looks inevitable) is the dovish RBNZ. After the latest meetings they have opened the window for a game changer on the stimulus front coming in August (via lowering domestic borrowing costs).
Consider the situation on the AUD side of the equation: Commodity shortages are entering back into play via the Covid shock which is a prelude towards the monetary crisis. Gold, Iron Ore, Copper and etc all look set for further advance; it will keep the basis for some action to the topside in AUD via collateral. Here tracking closely 0.677x in AUDUSD and 0.637x in NZD as the line in sand for the cross. Look to ride AUDNZD up towards the 1.12 macro targets.
As usual thanks all for keeping the feedback coming 👍 or 👎
So what are we trading here?
In this position it would be an obvious mistake to not acknowledge risk sentiment worsening over the weekend as cases continue to escalate, clearly the market is exposed to the storm (that is to say the series of localised lockdowns are a done-deal, the only question remains whether it becomes more widespread).
On the monetary side, the correct flow to shelter from if things materially worsen (sadly looks inevitable) is the dovish RBNZ. After the latest meetings they have opened the window for a game changer on the stimulus front coming in August (via lowering domestic borrowing costs).
Consider the situation on the AUD side of the equation: Commodity shortages are entering back into play via the Covid shock which is a prelude towards the monetary crisis. Gold, Iron Ore, Copper and etc all look set for further advance; it will keep the basis for some action to the topside in AUD via collateral. Here tracking closely 0.677x in AUDUSD and 0.637x in NZD as the line in sand for the cross. Look to ride AUDNZD up towards the 1.12 macro targets.
As usual thanks all for keeping the feedback coming 👍 or 👎
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A quick chart update here:
