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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.
MARKET INSIGHT
Executive Summary:
- A buying the dips strategy has worked well in the AUD/NZD cross through 2022. After starting the year around 1.06 we have progressed up to to just beyond 1.1250. We are off highs currently (last 1.1190), but if history is a guide, the current pullback will be supported before the pair moves to fresh cyclical highs.
- Arguably though, the cyclical backdrop is less supportive now compared to earlier points in the year. We aren’t seeing the same degree of upside surprises in Australian data, relative to NZ, that we were earlier in the year. RBA Governor Lowe also stated last week that the case can be made for a slower pace of rate hikes.
- From a broader macro standpoint the market may be more reluctant to take AUD/NZD to fresh highs, when the cyclical indicators have turned less supportive. At the very least, the market may want to wait for these indicators to turn back in AUD’s favor before buying the current dip.
- See this link for full details:
Fig 1: AUD/NZD Versus AU-NZ 2yr Swap Spread
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.
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