Short NZDCAD - Political Overhang (Late Entry)
NZD has been weak since the stalemate election. I looked at this pair yesterday and thought I wanted to go short it given CAD is a strong currency and generally there are few major news for it this week (BOC Governor Poloz's speech tomorrow and the GDP on Friday).
NZD in my opinion can remain surpressed as the NZ politician scramble to form a coalition government. Market reaction so far is if National wins NZD up and if Labour wins NZD down. It's all in the hand of New Zealand First's leader to choose which side he wants to take on. My guess and probably the market at the moment is he is going to side with Labour and thus a weak NZD. But almost anything can happen with this kind of election outcome thus the reason I'm not so keen to take on this trade.
Nevertheless, I believe uncertainty will dampen demand for NZD thus weaken the currency in short term, I would trade this but with 1/2 the usual size.
Technical wise, I missed the entry as it rebound to 0.9 level. I'll use that level as SL now and aim to hit the 0.89 level. This trade may need more support from CAD good news.
NZD in my opinion can remain surpressed as the NZ politician scramble to form a coalition government. Market reaction so far is if National wins NZD up and if Labour wins NZD down. It's all in the hand of New Zealand First's leader to choose which side he wants to take on. My guess and probably the market at the moment is he is going to side with Labour and thus a weak NZD. But almost anything can happen with this kind of election outcome thus the reason I'm not so keen to take on this trade.
Nevertheless, I believe uncertainty will dampen demand for NZD thus weaken the currency in short term, I would trade this but with 1/2 the usual size.
Technical wise, I missed the entry as it rebound to 0.9 level. I'll use that level as SL now and aim to hit the 0.89 level. This trade may need more support from CAD good news.