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Relative Data Momentum Still Supportive

AUDNZD

The AUD/NZD cross has pushed back to fresh multi-week highs, above 1.1080. Relative data momentum remains in favor of higher cross levels.

  • The chart below plots the AUD/NZD cross against relative business conditions, which reflects the difference between the AU NAB business conditions index (last +16) and the NZ ANZ activity outlook measure (last -9.1).
  • The latest reading on the chart assumes the next NAB business conditions reading, which is due in the middle of July, is unchanged.
  • We could see some downside from this print but note the AU preliminary PMI readings for June held up well.
  • The general tone to Australian data also remains upbeat in a relative sense. Today, we had a surge in job vacancies, along with slightly stronger credit data. This comes after yesterday's solid retail sales beat.
  • Yield spreads have moved in AUD's favor today, up 2.5bps for 2yr swaps to -51bps, while in the government bond space the same spread has risen by +5bps.

Fig 1: AUD/NZD & Relative Business Conditions

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The AUD/NZD cross has pushed back to fresh multi-week highs, above 1.1080. Relative data momentum remains in favor of higher cross levels.

  • The chart below plots the AUD/NZD cross against relative business conditions, which reflects the difference between the AU NAB business conditions index (last +16) and the NZ ANZ activity outlook measure (last -9.1).
  • The latest reading on the chart assumes the next NAB business conditions reading, which is due in the middle of July, is unchanged.
  • We could see some downside from this print but note the AU preliminary PMI readings for June held up well.
  • The general tone to Australian data also remains upbeat in a relative sense. Today, we had a surge in job vacancies, along with slightly stronger credit data. This comes after yesterday's solid retail sales beat.
  • Yield spreads have moved in AUD's favor today, up 2.5bps for 2yr swaps to -51bps, while in the government bond space the same spread has risen by +5bps.

Fig 1: AUD/NZD & Relative Business Conditions

Keep reading...Show less