22 AUG 2013 15:42 EDT
By eFXnews.com
Australia and New Zealand Banking Group (ANZ) entered into a fresh
macro tactical trade at 1.1482 with a target at 1.1855 and a stop at
1.1220.
"The coming FOMC tapering is testing the durability of economies in Asia that rely on easy money financing. A side effect of New Zealand’s macro-prudential measures introduced this week is to discourage capital inflows, meaning policymakers there are actually working in the same direction as the FOMC, and doubling-up the downward pressure on the NZD within the broader context of Asian financial market stress," ANZ says as a rationale behind this call.
"Finally, while we are conscious that periods of tight conditions in global financial markets often pressure the AUD more than the NZD, we are less certain this time around. In the past, the tail risk in Australia has increased above that in New Zealand. This was especially true in the crisis and was neatly reflected by the risk reversal moving to previously uncharted levels. At the time, the exchange rate followed the tail risk. This is not the case this time around – the market currently sees tail risks as roughly evenly balanced," ANZ adds.
"The coming FOMC tapering is testing the durability of economies in Asia that rely on easy money financing. A side effect of New Zealand’s macro-prudential measures introduced this week is to discourage capital inflows, meaning policymakers there are actually working in the same direction as the FOMC, and doubling-up the downward pressure on the NZD within the broader context of Asian financial market stress," ANZ says as a rationale behind this call.
"Finally, while we are conscious that periods of tight conditions in global financial markets often pressure the AUD more than the NZD, we are less certain this time around. In the past, the tail risk in Australia has increased above that in New Zealand. This was especially true in the crisis and was neatly reflected by the risk reversal moving to previously uncharted levels. At the time, the exchange rate followed the tail risk. This is not the case this time around – the market currently sees tail risks as roughly evenly balanced," ANZ adds.
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