AUDNZD returns to the cross hairs

Good news this morning as only five new coronavirus cases were reported in Victoria and no new cases reported anywhere else in the country. Australia’s emergence from the second wave, coinciding with the beginning of the warmer months that experts suggest mitigates the spread of the virus.

Charts (5)

Hopefully, by the time the colder weather returns in late April/May a coronavirus vaccine has been discovered and distributed to the vulnerable. In the interim, a broader re-opening of the Australian economy and state borders appears imminent, and a travel bubble with New Zealand appears to be back on the cards.

Providing an opportunity to review the AUDNZD cross rate for the first time since a trade update in early August here.

“We recommend raising the stop loss from 1.0566 to just below the overnight low at 1.0715. If triggered this would result in a small profit or at worst a breakeven trade if stopped out. The initial target remains the June 1.0881 high and beyond that 1.1000/50.”

After reaching the secondary profit target of the trade 1.1000/50 area, AUDNZD commenced a pullback. The cause of the pullback, a tightening of the Victorian lockdown, the rising odds of an RBA rate cut by year-end and the deleveraging in September that extended into the prices of Australia’s key commodity exports.

However, with 15bp of an RBA rate cut now priced for November, a stimulatory Australian federal budget to be announced next week, a relaxation of responsible lending bank rules that will likely increase the flow of credit and property prices, and a stabilisation in risk sentiment, the time is right to revisit a long AUDNZD trade idea.

From a technical perspective, last week AUDNZD pulled back to the “abc” wave equality retracement target at 1.0715.  While todays recovery is encouraging for the pairs bullish prospects, a break and close above resistance 1.0820/30 is required to provide further confirmation that the uptrend has resumed.

In this instance, consider re-opening longs in AUDNZD, looking for a retest of the August 1.1043 high, before 1.1500, with a stop loss placed at 1.0705. The stop loss should be trailed higher presuming the market rallies as expected.

AUDNZD returns to the cross hairs

Source Tradingview. The figures stated areas of the 28th of September 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.