Big Trade NZD/JPY – Cancelled

**Given the sharp fall in dairy prices and upcoming FOMC. We are canceling these orders for now.

Big Trade – Buy NZD/JPY

Place order to Buy 1 Lot NZD/JPY at 88.27

Place order to Buy 1 More Lot at 87.35

Stop 85.70

We like the New Zealand dollar and we like USD/JPY and this combination makes NZD/JPY an extremely attractive trade.

This afternoon the Reserve Bank of New Zealand left interest rates unchanged and told us that they see a prolonged period of interest rate stability. While this is far from the hawkish view that is typically needed to lift a currency, in an environment when investors are worried about who will cut rates next, their steady outlook proved to be extremely positive for NZD. In fact NZD/USD erased all of its earlier losses to end the day in positive territory. RBNZ Governor Wheeler’s belief that inflation will pick up when oil effect passes and that New Zealand is in a different situation than many other countries suggests that they have no intention of moving rates even though they warned that the next move in rates could be up or down – this guidance should lead to a further recovery in the New Zealand dollar.

Meanwhile we continue to look for a stronger U.S. dollar ahead of next week’s FOMC rate decision. Tomorrow’s consumer spending numbers will most likely reinforce the attractiveness of the greenback as strong non-farm payrolls, rise in gas prices and increase in spending according to Redbook point to a stronger report. The Federal Reserve is gearing up to raise interest rates and regardless of whether it comes in June or September this prospect should continue to be extremely positive for the US dollar. While Fed tightening in 2015 is widely expected a change in forward guidance next week will still lift the dollar and this event risk acts as a target for dollar bulls buying into the news. If retail sales surprised to the upside like we expect, it will harden expectations for a shift in guidance that should send the greenback to fresh multi-year highs against many major currencies going into next week’s monetary policy announcement.

The Chart

NZDJPY031215

Rather than chasing the currency pair, we prefer to buy on a retrace post news. The following 15 minute chart of NZD/JPY shows are buy levels:

Big Trade – Buy NZD/JPY

Place order to Buy 1 Lot NZD/JPY at 88.27

Place order to Buy 1 More Lot at 87.35

Stop 85.70

Swing

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