Currency Analysis Report 12/1/20 – The Tide Turned...Continue To Short The AUD/NZD

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Although Australia and New Zealand both rely on China to import their goods, the two currencies do diverge more often than one would think.
Because of the dynamics within the two countries, earlier this year, the Australian dollar was depreciating against the New Zealand dollar as the two countries were going in opposite direction in terms of how they want to spruce up their economy. While New Zealand was putting their interest rate on hold, Australia had no choice but to continue cutting their rates.

However, as the year slowly comes to an end, sentiment and the technicals are favoring the Aussie over the Kiwi.

The New Zealand dollar’s months-long reign over its Australian counterpart may be nearing an end. Signs are emerging that the Aussie could post a stronger finish heading into the year-end as tailwinds for the kiwi fade and Australia’s labor market shows signs of a recovery.

Both commodity-linked currencies have been buoyed by an improving global outlook but the kiwi has gotten an extra lift as traders pare bets for a negative cash rate. With investors having now unwound almost all pricing for more easing from the Reserve Bank of New Zealand, the kiwi may be starved of fresh catalysts that are needed to help it retain its dominance over the Aussie.

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Source

The Australian dollar moved higher for a fourth consecutive week following an increasingly positive economic outlook, along with China posting its sixth month of industrial profits this week.

So where is the AUD/NZD headed next, lets go to the charts?

Monthly Chart (Curve Time Frame) - monthly supply is 1.14000 at and monthly demand is at 1.01500.

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Weekly Chart (Trend Time Frame) – the trend sideways with downside momentum.

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Daily Chart (Entry Time Frame) – the chart suggested there were two levels to short, both working out just fine. However, since the chart suggests another 300 pips to the downside, short price on a pull back with a target at 1.02000.

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This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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