Forex Investment and Currency Trading

The extent of NZD’s downside since the RBNZ cut rates last week has been surprisingly shallow. The most recent data from the TFX gives an insight into why. Japanese margin traders have been very good buyers on the recent NZD sell-off. Even as NZD/USD sold off from around 0.7725 to 0.7310, net NZDJPY longs on the TFX increased from 127k to an all time high of 204.6k.  NZD/JPY longs continue to make up the bulk of total JPY shorts on the TFX. As a % of total JPY shorts, NZD longs have increased from 36% to 60% over the past 2 weeks. Clearly, the heavier the positioning, the more vulnerable the NZD when positions get liquidated. But for now, these margin traders are preventing a deeper and disorderly sell-off in NZD.