• GDT auction results show rise of 2.2%
  • Largest rise for the price index in at least 6 months
  • NZD could be poised to rise aided by high level of spec shorts

 The fortnightly GDT auction results have shown a strong rise with the price index higher by 2.2% on the prior reading. This is the largest increase in quite some time with recent months being characterised by several notable declines. 

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 The 2.2% rise in the GDT auction is the largest increase in several months. Source:

The New Zealand dollar is typically the most sensitive currency to the GDT auction results and the strong number could offer some support to the Kiwi. On the day the NZD is fairly mixed at the moment – the NZDUSD has reached its highest level in 11 weeks today but this is more down to the weakness seen in the US dollar rather than strength in the NZD.

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 The NZDUSD has moved back above the Ichimoku cloud on D1, with the last two breaks of the cloud leading to sustained moves. Source: xStation

We also pointed out earlier that the latest data on of speculative positioning in the New Zealand dollar could be seen to offer a contrarian signal to go long. According to the most recent numbers the number of speculative shorts in the market is at close to its highest level in 6 years and this may be seen to suggest that the Kiwi is primed for a snapback should these shorts look to cover.

The EURNZD is another pair that may be seen as an attractive way to gain long exposure to the Kiwi with the market rising in recent days and the Euro also experiencing extreme levels of positioning – this time on the long side. The market has pulled back to test the 21 EMA on a D1 chart and with the 8 period below this there is some suggestion that it is in a downtrend.

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 The EURNZD is in a downtrend according to the 8 and 21 EMAs. Source: xStation