New Zealand's upbeat GDP reduces prospects of OCR cut, so as US CPI for Fed hikes.

NZ produced the upbeat GDP QoQ numbers last week, actual 0.7% versus forecasts at 0.5%.

On the flip side, Fed’s deferral on rate hiking cycle due to various considerable reasons (especially US CPI, job market pressures and global slowdown) may hamper dollar prospects.

US CPI MoM prints at 0.2% versus forecasts at 0.3% and previous 0.4%.

As a result, if not in near terms we could foresee uncertainty on both sides of central banks who are likely to deliver changes in their respective monetary policies, as the long term downtrend has given trend reversal signal or it is just puzzling.

Well, technically although this pair has broken major resistances at 0.6896 levels and DMAs to evidence considerable price bounces further.

Hedging Framework: Spread ratio: (Long 1: Long 1: Short 1)

While the implied volatilities of 1m NZD/USD ATM call options are at 12.98% and likely to perceive at 13.09% in next 3m tenors.

With trend puzzling on either direction we like to advocate 3-Way Options straddle versus put option.

How to execute: Go long in NZD/USD 3M At the money delta put, Go long 6M at the money delta call and simultaneously, Short 1M (1.5%) out of the money puts.