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Key Support Remains Exposed

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AUD/NZD Below Key Moving Average Levels Ahead Of RBA Decision

AUDNZD

The AUD/NZD cross is struggling to hold above the 1.1000 level (last 1.0990). The pair lost 0.34% yesterday and is now down 4.3% from late September highs. The simple 200-day MA is just above current spot levels at 1.1002 (the 200-day EMA is slightly higher at 1.1019), but we are comfortably below other simple MAs.

  • NZD has seen some outperformance relative to AUD compared to AU-NZ yield momentum, although these trends may have been influenced by NZ WGBI related flows. For instance, the AU-NZ 10yr government bond yield spread is back to -45bps, compared to mid-October wides at -73bps.
  • AUD/NZD versus the AU-NZ 2yr swap spread presents a less supportive picture from the AUD standpoint.
  • Other drivers, such as relative data surprises and relative commodity price trends are still skewed in NZD's favor, although the cross has clearly played some catch up to the downside with these trends.
  • It may take a hawkish RBA surprise to help shift momentum back in AUD's favor in the near term.

Fig 1: AUD/NZD Versus Key MA Levels

Source: MNI - Market News/Bloomberg

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