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Ack! I didn’t see that pre-election fiscal update coming! It turns out the New Zealand treasury cut growth forecasts, forcing the Kiwi to retreat and convincing me to jump ship.

Long NZD/USD Idea

I was watching a long-term area of interest on NZD/USD and it looked like the support zone was already holding, so I hopped in a long position at market. At the same time, price also busted through a descending trend line on the 1-hour chart to indicate that a reversal is in order.

However, the pair barely sustained its climb as it tumbled back down when the New Zealand Treasury released their pre-election fiscal update. This contained GDP downgrades and not-so-upbeat forecasts for employment and wages.

NZD/USD 1-hour Forex Chart

Since this kind of sentiment could weigh on RBNZ tightening expectations and the value of the Kiwi for much longer, I decided to cut my losses quick on this short position instead of holding on and waiting for the tide to turn. After all, I only risked 0.25% of my account on the market entry, allowing me to minimize my losses.

Apart from that, weakening risk appetite is also hurting the higher-yielding Kiwi as tensions between the U.S. and North Korea are resurfacing. Here’s the damage:

P/L: -80 pips / -0.06%

With these recent updates, I’m looking into taking a reverse position on NZD/USD or maybe shift to NZD/JPY, which is less vulnerable to U.S. politics and tends to selloff more during risk-off days. Stay tuned!



See also: Q2 2017 Trading Performance Review

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