With sustained rate hikes in the US in question after Friday's dismal payroll number, risk aversion among traders/investors is high yet again. This backdrop will likely have those same individuals seeking yield. With rates a full 475 bp's higher in New Zealand and 325 bp's in Australia and with limited specualtive positioning in these currencies via
FX futures, the carry trade may well be on its way back.
Technically both of these currencies are set up to the long side. However, I will refrain from an entry at this point until after the Fed meeting. The verbage and decision will offer a better insight going forward.
Dave Floyd
Aspen Trading Group