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AUD/NZD Dip Below 100 Day MA Supported For Now

AUDNZD

The AUD/NZD cross dipped back below 1.1000 before support emerged. The combination of Australia's weaker than expected wages outcome and the RBNZ's hawkish 50bps hike drove a sharp move lower. The RBNZ has a higher peak for the RBNZ track, while also noting the central bank considered a larger move at today's meeting. In contrast, market futures for the RBA September meeting dipped, although this proved to be short lived. The implied rate is back at 2.20%, so little changed on the day. Market pricing is below a 50bps move at this meeting though, given the current RBA cash rate sits at 1.85%.

  • The cross has stabilized somewhat now, back above the 1.1000 handle (last 1.1020/25), while note the 100 day-MA comes in at 1.1014. We haven't spent meaningful time below this MA level since early December 2021.
  • The 2yr AU-NZ swap spread is back to -60bps. We were closer to -40bps around a week ago. The current level of the cross is roughly in line with these shifts, perhaps a little more downside in the cross is a risk, see the chart below.

Fig 1: AUD/NZD & AU-NZ 2yr Swap Spread

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The AUD/NZD cross dipped back below 1.1000 before support emerged. The combination of Australia's weaker than expected wages outcome and the RBNZ's hawkish 50bps hike drove a sharp move lower. The RBNZ has a higher peak for the RBNZ track, while also noting the central bank considered a larger move at today's meeting. In contrast, market futures for the RBA September meeting dipped, although this proved to be short lived. The implied rate is back at 2.20%, so little changed on the day. Market pricing is below a 50bps move at this meeting though, given the current RBA cash rate sits at 1.85%.

  • The cross has stabilized somewhat now, back above the 1.1000 handle (last 1.1020/25), while note the 100 day-MA comes in at 1.1014. We haven't spent meaningful time below this MA level since early December 2021.
  • The 2yr AU-NZ swap spread is back to -60bps. We were closer to -40bps around a week ago. The current level of the cross is roughly in line with these shifts, perhaps a little more downside in the cross is a risk, see the chart below.

Fig 1: AUD/NZD & AU-NZ 2yr Swap Spread

Keep reading...Show less