Flightless bird
[20/11/25]
The popular AUDNZD long has been resolving itself into something feeling more like equilibrium. A two-punch combo of a disappointing (in-line) NZ jobs print saw an illiquid 1.15 barrier breach and gap higher in the front tenors, followed by an impressive headline number out of the AU counterpart on Nov 13th, which formed the ‘blow-out-top’ seen on the chart below (1.1636 high); with AUDXXX punctured alongside AI/Tech in the sessions to follow.
I like the story here. Simplified: the summer divergence in AUD and NZD was built upon the outperformance of metals and miners, a global equity surge amidst peak ‘debasement’ euphoria and a clearly diverging (rhetoric & action) set of antipodean central banks, with the former quickest to complete its cutting cycle and enjoying a barrage of better hard data. This logic was entrenched at 1.10/12 and inducing FOMO at 1.14, yet seems to have dissipated as we consolidate near the highs, having cleansed FXO-related orderboards and with asymmetry around the up-coming NZ data releases and central bank language now shifting. Next Wednesday, we have the RBNZ. A 25bp cut to 2.25% is fully priced (34bp priced out to Feb). My feeling is that there is a potentially great set-up here to fade a rally in AUDNZD ahead of this meeting, with the recent data stabilisation and central bank language moderation to be digested by the market as a ‘hawkish cut’ (just as we had seen out of the BOC last month). The goal is to see c.5-7bp of cut pricing stripped back and for the ‘most shorted CTA ccy in G10 FX’ to rebound by 1-1.5%. We have AU Q3 GDP on Dec 3, hence I am hoping the lifespan of this trade is short and will keep targets sensible.
Trade expression of choice:
Offer AUDNZD @ 1.1590 (green). S/L 1.1675 (red). T/P 1.1410.
N.B. 50% of normal deployment size (i.e. 2% margin usage), given difficulty positioning in thematic FX through this US data-drought and the more tactical (NZ data release) nature of this trade.
Update [26/11/25]
Nailed the view; fumbled the trade! A 2.25% OCR but with a 2.20% terminal, accompanied by a namesake performance by Hawkesby. Cut pricing unwound and a 1% nosedive in AUDNZD (1.1407 low). A poor display on my part, being too ‘cute’ with entry and missing the move, despite calling it. Cancelling the orders as the asymmetry has flattened and moving on!
