New Zealand Retail Sales q/q just came in: Actual: 2.1%, Exp: 1.3% and previous -0.4%. The Core retail sales came in slightly lower; but still above the consensus estimate: Actual: 1.5%, Exp: 1.4%, Previous -0.3%.
The Kiwi ripped on the news, which was to be expected because there was evidence of strong short interest entering just prior to the news. (Check the 1m candles - did not correlate with risk appetite across the board.) The economic data releases out of New Zealand has been so bad over the last quarter, that the sentiment of short term forex traders was decidedly negative. As we know, when sentiment becomes this lopsided, there's attractive risk and reward to be found in fading it. Especially when fading it means trading with the trend!
From a technical view, we are in an uptrend on the daily and 1hr chart and are now breaking out of an ascending triangle on the weekly chart. Graphs are located here.
It's important to note that at some point, the equity markets around the world will probably capitulate, and commodity currencies will sell off hard against safe haven currencies (primarily the USD.) It's also important to note that THIS HASN'T HAPPENED YET. It can be deadly to base a trade on a theory of what might happen, without seeing evidence of that already beginning to occur. I heard a lot of people on CNBC shorting the market last fall and telling the world the stock market was going to sell off due to fiscal cliff concerns. Guess what, it didn't happen. When the carnage does finally begin to occur, I have a feeling everyone will KNOW the bloodbath has begun. If it's really that apparent, it should be easy to identify and jump on. Until then, I'm going to remain patient and play the price action that I see in front of me.
When in doubt of what to do, I usually refer to the popular saying on Wall Street, "If you're early, then you're wrong."
Note: I would not be surprised if this is a false breakout on NZD/USD and we run up to 86.00 or 87.00, causing the shorts to cover and new longs to enter the market before a sharp reversal. It seems like that course of action would cause the most pain to market participants as a group, so it seems logical that it would happen.
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