Swap Rate Spread Close, NZD Pairs: Levels, Ranges, Targets

The RBNZ as the leading central bank among the group of world nations switched from the Monetary Conditions Index to adopt Taylor Rules and the world followed. CPI calculations were re arranged by the RBNZ and the world followed. The RBNZ informed OIl accounted for 0.2 in CPI calculations and the world followed. Trade Weight indices re factored every 5 years began with the RBNZ. Now comes the next RBNZ’s greatest market convention achievement by switching its most important indicator Swap Rate Spread Close to basis points. For the RBNZ, this move is beyond smart, forward and brilliant as it aligns its interest rate system to other central bank wholesale changes but without a complete restructure.
Editorially and respectfully, its a proud moment as I surpassed the most respected RBNZ by at least 2 years prior. It explains why the few I accept in my trade service join but never leave and why stops, charts and all market conventions employed by a vast majority are never used or even considered. We deal and trade in a factual number offered by the central banks. Stated respectfully for the record rather than an advertisement.
Then the unknown questions by the RBNZ move are: is the market simpler to understand and trade or does this move “professionilize” the market to the point understanding travels light years beyond reach and comprehension.
The vitally important Swap Rate Spread Close for New Zealand’s financial markets are the 10 and 2 year yield spreads and its the basis to price Swaps from 1 to 15 years. The current Swap Rate Spread Close runs 1.03, lowest since January and Swaps along the curve from 1 to 15 years run from 2.06 to 3.30 at the 10 year and 3.59 at 15 years. The 2.06 is the current 2 year yield close. Important for readers is not to focus on fancy terms like Swaps but the numbers.
Next importance to the Swap Rate Spread Close is to establish a basis to price the ever important New Zealand Bank Bills. Current Bank Bills are running from 1.84 to 2.01. Bank Bills are currently trading below Swap rates but its normal to see this in markets.
Central banks and traded financial instruments are experts to protect bottoms and establish floors. The Swap Rate Spread Close establishes well defined and forecasted floors. Its much easier to take a trade long from bottoms than try to predict a long to theoretically go to infinity. Alternatively, its much easier to take a short to bottoms. NZD/USD is well defined at 0.6800. The S&P NZD 50 Stock Index is well defined bottom at 7193.65, The NZD 20 Index at 4912.36.
NZD/USD as usual is running at terrific correlations to its cross pairs. NZD is a wonderful currency pair inside a brilliant RBNZ system, NZD/USD Correlations run + 66% to NZD/JPY, + 94% to NZD/CHF, + 96% to NZD/CAD and + 78% to most important NZD/EUR.
NZD/USD most important break points are located at dropping 0.7038, 0.7060 and 0.7080.
NZD/JPY most Vital break points overall are located at 80.37, 79.38 and 78.11. Points to trade and watch for today are 79.17 and 78.10.
NZD/CHF most vital brak points are located at 0.7255, 0.7121 and 0.7055.
NZD/CAD most vital break points are located at 0.9371 and 0.9398. The range for today will trade from 0.9392, 0.9372 to 0.9352.
NZD/EUR most vital break points are located at 0.6658 and 0.6586. The range for today will trade from 0.6615, 0.6584 and 0.6553.

 

Brian Twomey

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