AUDNZD
- AUD/NZD broke above the 1.1100 ceiling it had struggled so much to trade above over the past 5 months last week, however it has been short lived, we last trade just below here at 1.1096, although we have manage to hold above the 20-day EMA level, bouncing right off it twice over the past day.
- Focus is squarely on the RBA later today, the market is pricing in about a 90% chance of a 25bps cut. All eyes on the statement with dovish hint likely to see the AUD/NZD trend lower as expected rate cuts from both the RBA and RBNZ drive convergence in medium-term yields, with the Australian curve having much more room to adjust downward, given New Zealand has already front-loaded cuts.
- Key levels to watch ahead of the CB meetings. A hawkish RBA is likely to see a move higher back to tests the Feb 14th highs of 1.1149, a break here would open a move to Nov highs of 1.1180, while to the downside a break of the 20-Day EMA at 1.1083, would likely see a test of the recent lower bounds at 1.1100 and the 200-day EMA at 1.0991.
- The AU-NZ 2yr swap spread has traded within narrow ranges this year, last 37bps.
Chart. AUD/NZD vs 2yr Swap
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