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AUD/NZD Breaks 1.0750, BoFA Sees Year-End Level at 1.1300

NZD
  • AUD/NZD has continued to push higher since tapping 1.0700 on Monday, trading up 0.13% on Wednesday to 1.0754, breaking initial resistance. As trading gets underway in Asia, the cross is unchanged after earlier reaching 1.0760.
  • Key technical levels to watch: initial resistance at 1.0773 (Jan 11 high/200-day EMA). Above this level, a break of the 1.0800 area would open up a retest of the YTD highs at 1.0833. While to the downside, a break back below 1.0706 (50-day EMA) could signal further weakness, opening up 1.0665 (Mar 6 lows) and below to 1.0640 (Feb 14 low).
  • BoFA has called for investors to short the NZD vs the AUD due to almost universally weaker economic data. BoFA views RBNZ cutting from May, with NZ and Australia having a neutral policy rate at 3%-3.5%. RBNZ is far more restrictive than RBA, which gives scope to cut further. They see AUD/NZD a little under 1.13 by year-end.
  • Looking ahead NZ has Business NZ Manufacturing PMI on Friday

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