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In New Zealand we’ve just seen the NZIER business confidence come out at the highest level in twenty years. This is of great interest, as it puts the probability of a rate hike from the RBNZ at the January 31 meeting at around 50%. The Q4 CPI print on January 21 is now a key event risk for the NZD, and a number above 1.4% could show that inflation has stabilised and headed towards the upper range of its 1-3% target.
Technically the daily chart suggests being long AUD/NZD, however the hourly chart still throws up the prospect that the pair could go lower, so I am fairly neutral from a technical perceptive. From a fundamental stand point, the prospect that the RBNZ hike rates in January is too much of a risk to be long and thus I close my long position at current levels 1.0805 for a seventeen pip profit.
For me when the technicals and the fundamentals don’t marry, I will generally back the technicals. However when the hourly chart paints a more bearish picture than the daily, I’ll tend to back the short-term view, mix in bearish fundamentals and this is enough of a reason to close longs.