Free Trial
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUDNZD
Data released out of the Antipodean countries today has applied some further pressure to AUD/NZD, sending the rate to its worst levels since Apr 7, 2020. The rate trades -22 pips at NZ$1.0297 at typing, after bottoming out at NZ$1.0284. Bears need the rate to pass the next technical milestone at NZ$1.0243 (76.4% retracement of the 2020 rally) before setting their sights on the NZ$1.0200 mark. Bulls look for a rebound above Sep 7 high of NZ$1.0454, which would bring the 50-DMA at NZ$1.0488 into play.
- New Zealand's quarterly economic growth in Q2 topped not only BBG median estimate but also expectations of all economists taking part in the survey. The kiwi drew support from the release, despite its backward-looking nature and a slight downward revision to the previous reading (albeit it was coupled with an upgrade to the prior reading of annual GDP growth).
- Australian labour market report was noisy, the unemployment rate unexpectedly plunged to 4.5% but the decline in employment was wider than suggested by BBG median estimate, while the participation rate fell slightly more than forecast. Developments in the labour market were affected by lockdown dynamics across the country.
- In the grand scheme of things, AUD/NZD has been on a downward trajectory for the bulk of this year amid continued central bank outlook divergence. Earlier this week, RBA Gov Lowe explicitly downplayed market pricing of rate hikes in '22 & '23. Meanwhile, the RBNZ stand ready to pull the trigger on OCR hikes, after being prevented from doing so last month by the implementation of a nationwide lockdown at the 11th hour before the decision.
- This divergence has become even more acute as upbeat New Zealand's GDP data prompted participants to boost hawkish RBNZ bets, with the OIS strip pricing 36bp worth of tightening at the October meeting as we type, up from 27bp seen yesterday. AU/NZ 2-Year swap spread has tightened further and last sits at its lowest point since mid-2015.
Fig. 1: Australia/New Zealand 2-Year Swap Spread
Source: MNI Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
We are facing technical issues, please contact our team.
ok
Your request was sent sucessfully! Our team will contact you soon.
ok