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Both Kiwi and Aussie go Oversold

Posted by WorldWideMarkets . on Aug 6, 2013 3:46:00 AM
Both the aussie and kiwi went into oversold territory in trading on Monday using the 14-day relative strength index print. Kiwi, 29.058, aussie 25.623. The reasons were very different with the aussie decline being on the expectation for the RBA rate cut while the New Zealand dollar was on concerns about the milk recall. Which one is the best bet going forward? Buying one against the other or even any other currency the kiwi looks a favorite. The fundamentals on the kiwi were already looking better vis-a-vis the aussie with the RBA looking set to act repeatedly until they stabilize the economy. Milk exports are important to New Zealand and the authorities and corporate interests there understand the severity and importance of the problem and are acting responsibly. Fonterra, the world's biggest dairy exporter, said on the weekend it had found bacteria in some products that could cause botulism. Of concern were some exports to China, Malaysia, Vietnam, Thailand and Saudi Arabia that used these products in infant milk powder and sports drinks. Prime Minister John Key publicly questioned why Fonterra took so long to disclose the latest contamination. But New Zealand is not going to risk its reputation and export markets and will act quickly to contain the problem and prevent any long term fallout. Which leaves the kiwi a better play for now.  kiwi trading

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