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Last week I took profits on AUD/NZD shorts and flipped the trade on Friday to a long position at 1.0788. With the pair pushing higher through European/US trade, the spot price is now 1.0845 (at the time of writing).
The daily chart continues to look more constructive and favours staying long; however the one-hour chart is looking like we could see a slight pullback. The MACD has fallen modestly through the signal line, although I am cognisant that it could be a false signal, while RSIs have come back from extreme levels.
I would not be overly surprised to see a slight dip in the pair to the 1.0820 to 1.0800 level in the short term, which I would use as a buying opportunity, with a view the pair can still squeeze to the 1.0900 level.
In terms of drivers and event risk this week, the big release will be the December employment report due out on Thursday. The market expects 10,000 jobs to be created (range of +25,000 to -10,000), with the unemployment rate expected to remain at 5.8%. Predicting and trading around this figure is extremely difficult and rarely do we see the print in-line with consensus. So with this in mind I will need a strong number for the trade to push to my target.
There is not a huge amount of data to focus on in New Zealand, with REINZ house prices the bigger release.
The chart below is a one-hour chart.