Day two: our potential AUD/NZD trade

AUD/NZD hit a low bid price of 1.0775 overnight, ten pips shy of my potential trade idea limit. 

Source: Bloomberg

Following on from my potential trade idea yesterday, all eyes now fall on Glenn Stevens’ speech at 13:00. Recall in his July 3 speech in Hobart he caused a stir in the market by suggesting ‘there is little doubt that significant parts of the trade-exposed sectors still find it quite ”uncomfortable”’.

Certainly the July Board minutes contained few correlations with Mr Stevens’ Hobart speech and this confused a few who felt if the Reserve Bank of Australia (RBA) governor really wanted a weaker currency it should have been further reflected in the official statement and minutes.

Mr Stevens could still detail something which pulls down the AUD, however given markets are pricing in a 60% chance of a cut this year, some of the downside potential is factored in.

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