Stronger than expected economic figures from New Zealand led to a pop higher for the Kiwi today so I’ve decided to hop out of this short NZD/USD position. Here’s how my trade turned out.
In my trade idea blog post a few weeks back, I mentioned how risk appetite hasn’t been working in the higher-yielding Kiwi’s favor as geopolitical risks have been hogging the spotlight. I decided to short on a pullback to the .7000 major psychological level and set my sights on new lows around .6750 for my profit target.
Price dipped to new lows alright but bearish pressure was cut short when New Zealand reported a 3.6% gain in its latest Global Dairy Trade auction, followed by much stronger than expected quarterly jobs figures. Employment ticked up by 1.2% in Q1 while the unemployment rate fell below 5% even with an increase in labor force participation.
As for the dollar, expectations of another weak NFP reading later this week and prevailing disappointment over the pace of Trump’s reform agenda are dampening gains. Earlier this week, the ISM manufacturing PMI printed another fall in its jobs component so I’m thinking further declines in other leading employment indicators could feed into the bearish USD frenzy.
With that, I thought it best to hop out at market (.6950) and pocket whatever gains I had. I initially thought of trailing my stop down to entry but I think the pair has room to head up north and eat up my gains once European session traders react to the latest reports from New Zealand. Here’s what I ended up with:
P/L: +50 pips / +0.20%
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See also: Q1 2017 Trading Performance Review
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