AUSSIE KIWI PAIR AUDNZD ON A STRONG BULLISH REVERSAL MOVE

FUNDAMENTAL BEAM

   Short AUD/NZD is not yet a crowded trade. In fact, the latest IMM data suggests quite the opposite. Speculative AUD longs have been built up faster than NZD longs, such that the (implied) AUD/NZD speculative position is actually a sizeable net long. The implication is that speculative positioning does not present an impediment to additional AUD/NZD downside.

- Despite the speed of the rally, the AUD/NZD is not yet 'cheap' according to fundamentals. Indicative of such, NZ-AU 3-year swap differentials, NZ-AU commodity prices, and relative business confidence currently suggests a 'fair-value' range of 1.2200-1.2500 for AUD/NZD. In short, the fundamental backdrop is likely to see AUD/NZD heavy over the coming 3-6 months.

TECHNICAL BEAM

The Aussie is gathering bullish momentum against the kiwi after trading lower lows for periods determined by the fundamentals. Fibonacci and Elliot wave analysis with a help of Gann time series shows the AUDNZD has begun a corrective wave leg III following a trend reversal late september.

The wave III or [W]  leg is expected to come to completion at the resistance level of 1.1516 and consequently retrace 21% fibonacci level  [X] = 1.1427. Then continue from wave leg [X] to a third wave leg C  or [Y].