ANZ: Top Of The Range

ANZ note that "AUD, NZD and the cross are struggling for direction. Few factors are explaining the price action in either the AUD or the NZD. The market has eaten all the low hanging fruit for the reflation trade, and is now waiting for evidence to see whether central banks will act to slow progress or a more sustained break higher in inflation expectations becomes evident. Neither outcome is likely to be evident any time soon. This might provide some space for cross trades to step back into the limelight."

• "For the cross, relative economic surprises are starting to play a prominent role in its direction. This will put a spotlight on Australia's employment and New Zealand's GDP over the next couple of weeks. We are more bullish than consensus on both prints, and we would expect a very strong NZ GDP number is more likely to move the market. Should it manifest, it will add some downside risk to the cross in the near term."
• "Our relatively neutral outlook for the AUD/NZD rate spread together with our bearish iron ore view add further downside risks. As such, up here at the top of the recent range, modest downside risks are building."