The Australian dollar is trading towards a record low against its neighbor New Zealand dollar. Can the antipodean cross hit parity?
The team at BNP Paribas presents the case for a long on AUD/NZD:
Here is their view, courtesy of eFXnews:
As AUD/NZD hits a record low, fading the move offers an excellent risk reward, says BNP Paribas.
“We believe that there is a potential profit in fading this week’s move to a new 30-year low on AUDNZD below 1.04, in anticipation of a rebound to 1.0850,” BNPP projects.
“Our BNP Paribas FX Positioning Analysis also suggests that the sharp sell-off in AUDNZD may have run its course. NZD shorts reached a near-record level of -40 (on our scale of -50 to +50) at the end of October 2014. Part of the explanation behind the sharp rally in the NZD since then is likely the need or desire to unwind these extreme shorts in the market,” BNPP adds.
“We believe there is an enticing case to enter long AUDNZD exposure at current record lows for an initial move back to around the 1.0850 level. Given that spot has already fallen below the 1.0430 level, we prefer initially to enter the trade through an option structure explained below,” BNPP advsies.
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