Treasure Chest: Opportunity in AUD/NZD?

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Currency specialists at ANZ Bank suspect a short term trading opportunity in AUD/NZD with the pair likely to be "squeezed" higher due to the market being short and likely forced to cover losing positions.

Why?

As commodity prices are recovering much faster than anyone would have anticipated (see iron ore post China's Golden Week Holidays, as one example) the FX pair is seen as poised on the basis that when the market is largely short (e.i. positioned for weakness) a sudden reversal can lead to sharp appreciation.

ANZ Bank analysts are targeting 1.2650 from around $1.24 today. In addition to the above justification, it is the analysts' suspicion that AUD/NZD has run into solid fundamental demand around the present 1.24 level.

Short Term Opportunity Only

Investors and traders should note this trading idea has a short life span only. Longer term, ANZ Bank is actually of the view that lower values should follow for AUD/NZD.

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