The NZD Rally may stretch into Asia for the second year in a row this year. Geopolitical tensions in the region may provide some geopolitical roadblocks, but the rally is clearly benefiting from the stability in the Asian economies and the absence of stimulus measures from the major central banks.
It is important to keep in mind that the rally may extend into Asia as well as into Europe. The rally is popular in Asia because of its perceived correlation with economic recovery. Therefore, if the rally continues and the recovery gains momentum, it will be easy for the rally to extend into Asia.
The rally is also associated with a strengthening of the Euro and other European currencies. Stronger Euro is also likely to boost support in the rally. Stronger Euro will strengthen support to the rally and it will be difficult for the rally to be halted until stronger Euro gain further strength.
So far, market participants are leaning towards the rally continuing this year. The rally has been as strong as it has been for any rally since before the last recession. Consequently, the rally has not fallen in the usual range as one would expect from bear markets, but has continued as it has.
Strong data also provide some strength to the rally. This is because more robust and reliable data may persuade investors to consider longer-term views. If long-term views are encouraged, the investor’s rate of return may increase. Longer-term views encourage stronger market movements and more bullish sentiment.
In addition, bullish sentiment may become more common. It is possible that when long-term views are encouraged, it becomes common for investors to take longer-term views on their investment portfolios. Thus, it will be possible for a bear market to experience a weaker pullback than a bull market would experience.
This makes the rally more resilient to economic challenges. Furthermore, if the rally continues and the economy improves, it will be easy for the rally to extend into Asia. However, the market may fall back in case the economy worsens. Thus, bear markets may encourage investors to take short-term measures to ensure that they do not lose money at the market’s worst.
In the event that the economy deteriorates, it will be difficult for the rally to continue and the rally may end up being less resilient to the uncertainties associated with economic stimulus measures. Therefore, the market may slow down as the uncertainty increases. Bear markets in other markets should be expected, but it will be more difficult for the rally to continue into Asia.
The market may even experience a decline. Bear markets are often accompanied by a decline in the market’s price. This is expected and normal because a decline is indicative of weaker economic conditions.
In a bear market, the market will tend to be narrower. A narrower market means that there is less economic activity. Therefore, traders who buy long positions will be less profitable. However, the rallies may extend if the rally is based on stronger long-term fundamentals, especially in countries where the economy is still fragile.
In addition, European investors have become increasingly more enthusiastic about the NZD Rally and they are trying to get in on the rally. Given the limited number of places to trade, it may be more difficult for the rally to continue. and thus, the rally may flatten out as the volatility rises.
At this point, it is difficult to predict whether the rally will continue and the rally may extend into Asia. but the rally has remained resilient despite the bumps along the way. so it is unlikely that the rally will fall off in the same way as the last rally did.