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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 AUD/NZD cross sits little changed for the session, the pair last near 1.0840/45, up from recent at 1.0788 (levels last printed in June this year). The Australian NAB business survey, out earlier, points to further economic headwinds for Australia. The chart below plots the AUD/NZD cross against AU-NZ relative business conditions, with the NAB business conditions print used for Australia (which printed today), while the ANZ business activity outlook survey is used for NZ (the next update comes in Sep for this print).
- Relative business conditions are heavily in favor of NZ, the most since 2016, when the AUD/NZD cross was at noticeably lower levels compared to present levels.
- Still, we have a meaningful wedge between the AUD/NZD and 2yr swap differentials (which remain close to flat). So that may limit further AUD/NZD downside until we see greater AU-NZ 2yr downside to reflect the relative business conditions backdrop. Key next data releases in Australia rest with jobs data next week, followed by the RBA cash rate decision. In NZ we have Q2 GDP next week.
- The other watch point is relative commodity prices, which have been skewed against the AUD as well, as metal prices come under pressure amid continuing economic headwinds in China. Our policy team in China noted we could see some stabilization in iron ore prices, as steel demand improves through Sep-Oct (see this link).
- Levels wise for AUD/NZD, the 20 & 200-day EMA are trading around the same levels and now act as resistance at 1.0880-85, while support is see at 1.0800.
Fig 1: AUD/NZD Versus AU-NZ Relative Business Conditions
Source: NAB/ANZ/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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