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AUD/NZD Pushing Higher

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Whilst AUD and NZD have been volatile against the USD today, relative data outcomes continue to point in AUD's favour.

  • To recap, Q1 NZ GDP was much weaker than expected, dipping 0.2%, versus market forecasts of a 0.6% rise. We noted that the detail wasn't as bad as the headline suggested, but it does continue to point to relative economic momentum in AUD's favour.
  • This point was reinforced by the better than expected AU jobs data. Total jobs growth was much higher than expected (60.6k v 25k forecast) and concentrated in full-time gains. The unemployment rate was unchanged at 3.9% relative to a 3.8% dip expected, although this owes to higher participation rates.
  • Not surprisingly, relative AU-NZ yield differentials are trending higher. The 10yr spread is almost back in positive territory, see the chart below.
  • This points to further upside in the cross rate. We aren't too far away from earlier June highs above 1.1170.

Fig 1: Relative Data Outcomes Pushing the AU-NZ Spreads Higher

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Whilst AUD and NZD have been volatile against the USD today, relative data outcomes continue to point in AUD's favour.

  • To recap, Q1 NZ GDP was much weaker than expected, dipping 0.2%, versus market forecasts of a 0.6% rise. We noted that the detail wasn't as bad as the headline suggested, but it does continue to point to relative economic momentum in AUD's favour.
  • This point was reinforced by the better than expected AU jobs data. Total jobs growth was much higher than expected (60.6k v 25k forecast) and concentrated in full-time gains. The unemployment rate was unchanged at 3.9% relative to a 3.8% dip expected, although this owes to higher participation rates.
  • Not surprisingly, relative AU-NZ yield differentials are trending higher. The 10yr spread is almost back in positive territory, see the chart below.
  • This points to further upside in the cross rate. We aren't too far away from earlier June highs above 1.1170.

Fig 1: Relative Data Outcomes Pushing the AU-NZ Spreads Higher

Keep reading...Show less