Vulnerable NZ Economy Hit By Rate Cuts, NZD/AUD Opportunity - Weekly Market Outlook with Peter Esho

Join Peter Esho as he details the key market events for the week ahead and the critical macro economic data for the week starting 15th of June 2015. The decision by the central bank in New Zealand last week to cut interest rates, the first interest rate cut moving away from the recent increase as we saw over the past year was very, very important. Invast has actually been talking about the vulnerabilities in the New Zealand's economy. We have been talking about the Australian dollar relative to the kiwi and the trend was really a short-term trend. We made the point over the past year or so that the New Zealand's economy was experiencing high inflation because of one off factors that were not necessarily front running the global economy. That is comeback to rouse this week but what we have seen is a sharp, snap back in the Australian dollar relative to the kiwi and we expect the vulnerabilities of the New Zealand's economy to continue showing and perhaps more cuts. Perhaps cuts to completely offset the recent rises that the central bank in New Zealand has been putting. The unemployment rate came out a lot worse than expected and we are seeing the sense of fear in the central bank of New Zealand that we had this time last year with the reserve bank in Australia. Now coming back to Australia, the jobs market has actually improved. Unemployment came down last week. The reserve bank did not leave the door open to cuts but the markets now starting to form a view that perhaps a lot of the heavy lifting has been put into place if the unemployment rate does come back below 6%. The case would further cut from the reserve bank would be a lot more difficult and the Australian dollar sitting within that 75 to 80 us cent range, a range which Invast has called explicitly over the past few months is a range where we expect consolidation and stability in the local currency. The way we will be playing it, is the Australian dollar relative to the kiwi? It is a very popular spread particularly with experienced traders. We expect it to trend towards the 1.2000 level over the next year or so. Perhaps a little bit of traffic at around that 1.1000 mark but once it breaks through, it will break through on fundamental, and the fundamentals which we spoke about earlier that the New Zealand's economy is actually lagging the global economy. The US market is really front running. It is the premier economy in the world and in the pacific. So the Aussie too old 1.2000 against the kiwi is something that we have in mind very, very explicitly. It is something that we wrote about a year ago. The trend is moved against us but we think our last week was a game changer and that is the currencies we will be probably watching very, very closely. Remember we have published our Monthly Investment Committee Outlook last week. If you have not sourced that document make sure you speak to the Invast staff and they will be more than happy to pass that through you. CONNECT WITH INVAST TODAY Facebook ► https://www.facebook.com/invastglobal Twitter ► http://twitter.com/InvastGlobal Linkedin ► http://www.linkedin.com/company/invast Invast ► http://www.invast.com.au Google+ ► https://plus.google.com/+InvastAu/