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
AUD/NZD made a fresh low of 1.0750 post the RBNZ, before stabilizing somewhat. The pair was last around 1.0770, which is just above lows back to March from this year. From a technical standpoint NZD bulls target a break of the bear channel support at 1.0690, then the 2022 low from 7 Jan at 1.0571.
- The RBNZ's hawkish 75bps hike, has driven a surge in NZ interest rates. The 2yr swap is around 25bps higher to 5.28%, as the market factors in higher RBNZ rate projections going into 2023.
- The chart below overlays AUD/NZD against the AU-NZ 2yr swap differential. The differential is now close to -150bps. Towards the end of October this spread was closer to -100bps. This differential also continues to point to lower cross levels.
Fig 1: AUD/NZD Versus AU-NZ 2yr Swap Spread
Source: MNI - Market News/Bloomberg
- Interestingly, the 2yr swap spread has spent little time wider than that -150bps level over recent decades, see the second chart below. As monetary policy cycles between the two economies are often correlated.
- Catalysts for a quick turnaround back in AUD's favor are not clear though, at least from a short term standpoint.
Fig 2: AU-NZ 2yr Swap Spread - Long Term Trends
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