On a daily technical chart we get a sense of feel that this currency cross is overreacting the recently publicized Australian jobless data.
On the flip side, The RBNZ early APAC trading session cut its Official Cash Rate by 25 basis points to 3.25%.
The NZ central bank's decision came in as a surprise as the governor Graeme Wheeler was expected to hold the OCR at this quarterly meeting but to signal rate cuts late in the year.
Market was pricing around 60% chances of a 25 basis points cut.
FX Option Strategies: (AUD/NZD)
Expect "Tug of war between bulls & bears" on AUD/NZD
We don't think any bullish nuisance on this pair anymore as the prevailing bull rallies set a clear implicit backdrop because upswings are not fortified by substantial volumes.
We may longs on binary options that will have daily expiry but definitely not on hedging grounds.
In order to remain in safe zones we recommend put ratio spreads.
So, for current trend in this pair which we would think it as overreacted pricing, hedge through buying a Put Ratio Spreads is the most suitable even though you are neutral on this pair but increased volatility.
Add bear Put Spread plus naked puts.
To construct this strategy, buy a Put and sell more Out-Of-The-Money puts at a lower strike price usually in the ratio of 1:2 or 1:3.
Use 15 day contracts to take advantage of time decay on short sides.
Margin is required to take short Put positions.
