25 Jun 2013
Flash: NZD/USD barrier continues to be vulnerable– Westpac
FXstreet.com (New York) - According to Global FX Strategist Sean Callow at Westpac, “The Fed’s tapering signal is clearly depressive for NZD/USD and the 0.7700 barrier is at risk of giving way – there remains plenty of scope for the market to swing to a large net short position however.”
In terms of NZ swaps, despite the Fed's recent move, yields are stretched to the upside and need a correction soon. NZ 2-year swaps should reverse soon around the 3.25% level, while the 2023 should be capped by 4.38%. Finally with regards to the NZ curve, the Fed surprise has steepened the curve further. For 2-10yr swap, the 150bp-160bp area is now resistance. “Given it’s getting stretched here, a flattening trade looms.” Callow recommends.
In terms of NZ swaps, despite the Fed's recent move, yields are stretched to the upside and need a correction soon. NZ 2-year swaps should reverse soon around the 3.25% level, while the 2023 should be capped by 4.38%. Finally with regards to the NZ curve, the Fed surprise has steepened the curve further. For 2-10yr swap, the 150bp-160bp area is now resistance. “Given it’s getting stretched here, a flattening trade looms.” Callow recommends.