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AUD/NZD Can't Sustain +1.10 Handle, But Uptrend Still looks Intact

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AUD/NZD hit fresh highs back to June last year post the weaker than expected Q1 NZ jobs report. We got to 1.1019, but now sit around 30pips lower, last near 1.0990/95. Recent moves above 1.1000 haven't been sustained in the pair but we still remain in an uptrend.

  • In terms of technicals, the 20-day EMA continues to track higher, last near 1.0930. All key EMAs are pushing higher, with the 200-day back around 1.0810. A clean break above 1.1000 could see mid April highs from last year around 1.1055/60 targeted. Beyond that lies the Feb 2023 highs close to 1.1090.
  • AU-NZ 2yr swap differentials continue to track higher, last around -67bps, still sub earlier 2024 highs, see the chart below. Relative commodity prices have also improved in AUD's favor, aided by the iron ore bounce. NZ dairy prices are also off recent highs. The other line on the chart is AU to NZ commodity prices.
  • The next major event for the cross is next week's RBA decision. No changes are expected, but the RBA tone will be eyed closely given recent stronger than expected Q1 inflation pressures.

Fig 1: AUD/NZD Versus AU-NZ 2yr Swap Spreads, & Relative Commodity Prices

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AUD/NZD hit fresh highs back to June last year post the weaker than expected Q1 NZ jobs report. We got to 1.1019, but now sit around 30pips lower, last near 1.0990/95. Recent moves above 1.1000 haven't been sustained in the pair but we still remain in an uptrend.

  • In terms of technicals, the 20-day EMA continues to track higher, last near 1.0930. All key EMAs are pushing higher, with the 200-day back around 1.0810. A clean break above 1.1000 could see mid April highs from last year around 1.1055/60 targeted. Beyond that lies the Feb 2023 highs close to 1.1090.
  • AU-NZ 2yr swap differentials continue to track higher, last around -67bps, still sub earlier 2024 highs, see the chart below. Relative commodity prices have also improved in AUD's favor, aided by the iron ore bounce. NZ dairy prices are also off recent highs. The other line on the chart is AU to NZ commodity prices.
  • The next major event for the cross is next week's RBA decision. No changes are expected, but the RBA tone will be eyed closely given recent stronger than expected Q1 inflation pressures.

Fig 1: AUD/NZD Versus AU-NZ 2yr Swap Spreads, & Relative Commodity Prices

Keep reading...Show less