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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.
AUDNZD
The psychological barrier at NZ$1.0500 briefly gave way for the first time since early December, as AUD/NZD sank in reaction to New Zealand's Q2 labour market statistics. Subsequent revisions to sell-side RBNZ views added pressure to the pair, which now trades -38 pips at NZ$1.0502.
- AUD/NZD bears look for a clean break below NZ$1.0500, before setting their sights squarely on Dec 1, 2020 low NZ$1.0418, which represents the previous cycle trough. The next layer of support is provided by NZ$1.0396, the 61.8% retracement of the Mar 18, 2020 - Aug 18, 2020 rally. The recent formation of a death cross bodes well for the bearish case. Bulls need to reclaim Jul 29 high of NZ$1.0618 to get some reprieve.
- AUD/NZD implied 2-week volatility (which now covers the next RBNZ MPS) has surged to 5.65%, its highest point in a month.
- All of the "big 4" New Zealand Banks now look for 3x 25bp hikes from the RBNZ during the remainder of '21. That equates to a 25bp hike at each of the remining 3 meetings. The OIS strip currently prices ~67bp of tightening over the same horizon.
- The previously flagged hawkish RBNZ repricing in the wake of the latest NZ labour market data has added fresh tightening pressure to the Australia/New Zealand 2-Year swap spread, resulting in yet another multi-year low for that differential.
Fig. 1: Australia/New Zealand 2-Year Swap Spread (%)
Source: 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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