The New Zealand economy may be showing signs of resilience, such as robust GDP growth, strong agricultural exports, or improving business confidence, supporting the NZD.

Meanwhile, the Eurozone could be grappling with weaker economic indicators, such as declining industrial output or sluggish consumer demand, weighing on the EUR.

If the Reserve Bank of New Zealand (RBNZ) maintains or signals a hawkish stance due to persistent inflation pressures, while the European Central Bank (ECB) adopts a more dovish tone, favoring prolonged accommodative measures, this creates a monetary policy gap favoring the NZD.

The NZD tends to perform better in risk-on market environments, driven by higher-yielding currencies, while the EUR can weaken due to its relatively lower yield and sensitivity to external shocks.

Strategy Overview: After years of being a discretionary trader, I’ve automated my strategy to generate signals automatically and opened it to the public now. I no longer need to manually search for trades. I use data analysis and methods to identify and capitalize on market opportunities.

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Short EURNZD

Reason: The U.S. economy is exhibiting stronger-than-expected growth, supported by robust employment data, resilient consumer spending, or upward revisions in GDP forecasts. This strengthens the USD.

Conversely, Swiss economic data might underperform or signal stagnation, reducing the attractiveness of the CHF as a safe haven.

2. Hawkish Federal Reserve vs. Dovish SNB:

If the Federal Reserve maintains a hawkish tone on 18/12/2024, emphasizing the need for higher interest rates to combat inflation, while the Swiss National Bank (SNB) signals a pause or dovish outlook, the interest rate differential would widen in favor of the USD.

LONG USDCHF

Strategy Overview: After years of being a discretionary trader, I’ve automated my strategy to generate signals automatically and opened it to the public now. I no longer need to manua

LONG AUDUSD

Reason: I am recommending a short EUR/USD trade based on our outlook for a weaker euro against the US dollar as we approach early 2025. My view aligns with the broader market expectations that Donald Trump, upon assuming office, will likely impose higher tariffs on imports from the EU. This move would deliver a significant negative growth shock to the eurozone, which has only recently started recovering from the energy price crisis triggered by the Ukraine conflict.

The European Central Bank (ECB) is expected to respond to slowing growth by continuing its rate-cutting cycle, as inflation gradually falls back toward its target. However, the combination of a weaker EUR and potential retaliatory tariffs could heighten inflation risks over the longer term.

In contrast, I anticipate the US rate market will remain cautious, as uncertainty around inflation stemming from Trump’s policies could prompt the Federal Reserve to slow the pace of its rate cuts next year. This divergence in monetary policy outlooks strengthens the case for further EUR/USD downside.

Short EURUSD

Reason: Political Stability and Market Confidence if the election results are perceived as stabilizing or supportive of economic growth, markets may respond with increased confidence in the USD, strengthening it against the CHF, a traditional safe-haven currency.

Risk-On Sentiment: Following an election, investors may shift from safe-haven assets (like CHF) toward higher-yielding USD assets, driving USD/CHF higher.

Positive Economic Projections: Projections of stronger U.S. economic growth can lead to bullish USD sentiment, influencing investors to long USD against lower-yielding, stable currencies like CHF.

Long USDCHF

Australia’s Resilient Economy and Hawkish Reserve Bank: The Reserve Bank of Australia (RBA) has recently signaled a willingness to continue tightening rates if inflation remains above target, with Australia’s economic resilience supporting these measures. This approach has bolstered the Australian dollar (AUD), drawing interest from global investors seeking yield.

UK’s Economic Stagnation and Dovish Bank of England: In contrast, the Bank of England (BoE) faces more significant economic hurdles. UK inflation is high, but growth has stagnated, raising concerns about a recession. Consequently, the BoE may be less aggressive in rate hikes going forward, weakening the pound (GBP) relative to the AUD.

Short GBPAUD

New Zealand's Hawkish Stance: The Reserve Bank of New Zealand (RBNZ) has maintained a hawkish approach to controlling inflation, resulting in one of the highest interest rates among developed economies. This policy not only strengthens the New Zealand dollar (NZD) by attracting foreign capital but also demonstrates the RBNZ’s willingness to continue tightening if inflation persists.

Eurozone's Economic Struggles: In contrast, the European Central Bank (ECB) faces more challenges in maintaining high interest rates due to slower economic growth across Europe. With inflation gradually easing and concerns over economic recession mounting, the ECB may adopt a more dovish or cautious approach. This divergence typically weakens the euro (EUR) relative to the NZD.

Reason: UK economy has recently shown resilience, with robust wage growth and consumer spending, contrasting with softer data from Canada. The Bank of England's hawkish stance—driven by persistent inflation concerns—further supports GBP strength, especially if the Bank of Canada remains cautious. Additionally, a recent decline in oil prices has weighed on CAD, as Canada’s economy is heavily tied to energy exports.

Long GBPCAD

Reason: Safe-Haven Demand for CHF In times of global economic uncertainty, the Swiss Franc typically strengthens as a safe-haven currency. Recent market tension or geopolitical instability, capital flows may shift towards CHF, putting downward pressure on USD/CHF.

Short USDCHF

Reason: The Reserve Bank of New Zealand (RBNZ) has signaled a more dovish stance amid concerns about slowing economic growth and declining consumer confidence. In contrast, the Bank of Japan (BoJ) is maintaining its ultra-loose monetary policy but is showing signs of potential adjustment due to rising inflationary pressures. This divergence in monetary policy may widen the interest rate differential, making the New Zealand dollar less attractive to investors compared to the Japanese yen. Furthermore, external factors such as commodity price fluctuations and geopolitical tensions could negatively impact the NZD, while the JPY remains a safe-haven currency. As a result, shorting NZD/JPY could capitalize on these fundamental shifts.

Short NZDJPY

Reason: The Eurozone is currently showing signs of economic stabilization, with indicators such as manufacturing PMI and GDP growth suggesting resilience despite challenges. In contrast, Switzerland is facing headwinds from a strong currency that is impacting its export-driven economy, along with potential changes in the Swiss National Bank's monetary policy to address inflation. As the ECB continues to adopt a more hawkish stance, signaling potential interest rate hikes, the euro may gain traction against the Swiss franc. This divergence in economic outlooks positions EUR/CHF favorably for a long trade, as the euro is likely to appreciate against a CHF that may weaken under economic pressure.

Long EURCHF

Reason: Recent economic indicators from the UK suggest a rebound in growth, particularly following improved consumer confidence and rising retail sales. The Bank of England's stance on interest rates may lead to further tightening, which would strengthen the pound against the Swiss franc, traditionally viewed as a safe-haven currency. Additionally, the ongoing uncertainty surrounding the Swiss economy, influenced by external factors such as global trade tensions and inflationary pressures, could further weaken the CHF. This combination of bullish sentiment for GBP and bearish outlook for CHF supports a long position on GBP/CHF.

Luca Santos

Luca Santos

Dec 02 2024

Short EURNZD

1

Luca Santos

Dec 02 2024

LONG USDCHF

Luca Santos

Nov 19 2024

LONG AUDUSD

1

Luca Santos

Nov 19 2024

Short EURUSD

Luca Santos

Nov 11 2024

Long USDCHF

Luca Santos

Nov 07 2024

Short GBPAUD

Luca Santos

Nov 07 2024

Short EURNZD

Luca Santos

Nov 05 2024

Long GBPCAD

Luca Santos

Nov 05 2024

Short USDCHF

Luca Santos

Nov 04 2024

Short NZDJPY

Luca Santos

Nov 04 2024

Long EURCHF

Luca Santos

Nov 04 2024

Long GBPCHF