AUDNZD major downtrend has been drifting in the consolidation phase and jerky in short run, drop to 1.0989 levels (recent lows).
For now, continues to consolidate between 1.1000 and 1.1100.
AUDNZD in medium-term perspective: A resumption of the trend rise which started in June should test 1.13, contingent on AU economic data remaining supportive, commodity prices recovering, risk sentiment remaining elevated, and NZ politics weighing on the NZD.
On the flip side, expect the 1.0809 areas which can’t be disregarded if iron ore remains under downward pressure. A retest of the 1.10 area is seen in April is also possible if iron ore’s rally since mid-June continues and global risk sentiment remains elevated.
We’ve seen the bearish impact on underlying AUDNZD movement in the major trend. Technically, the price behavior has been weaker with both leading as well as lagging indicators are bearish bias.
Contemplating above fundamental developments and the ongoing technical trend of this pair, to participate in the puzzling swings, we advocate option strips strategy that contains 3 legs of vega longs (2 puts plus 1 call). The option strips that likely to fetch desired yields regardless of the trend but more potential on southwards by arresting bearish risks.
As shown in the diagram, the execution goes this way: Initiate 2 lots of 1m longs in Vega put options, simultaneously, add 1 lot of Vega call options of the similar expiry, the strategy is executed at net debit and net delta of -0.46.
Please be noted that the strategy is likely to derive positive cashflows regardless of the underlying spot FX moves with more potential on the downside.
Currency Strength Index: FxWirePro's hourly AUD spot index is flashing at 66 levels (which is bullish), while hourly NZD spot index was at shy above -23 (which is neutral) while articulating (at 06:48 GMT). For more details on the index, please refer below weblink:
http://www.fxwirepro.com/currencyindex.
FxWirePro launches Absolute Return Managed Program. For more details, visit:


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