This is an interesting chart today because NZD/USD has been a strong performer in the past month and highly correlated with stock markets.
Today it ran into the August high and reversed, putting an outside day on the chart.
It’s a real gut-check moment in markets today. Either the Fed scenario of a soft landing and gradually-declining inflation pans out or we get a re-emergence of inflation or we get a hard landing. In the first scenario NZD/USD rises but in the other two it declines in a classic ‘dollar smile’ outlook.
For right now, I think you have to go with the chart and — at the very least — take a bit of risk off the table. The anti-USD trade has had a great run but the future is cloudy and year-end flows aren’t going to clear the picture.