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​Back Sub 1.1300 As RBNZ Delivers

AUDNZD

The AUD/NZD cross has dipped sharply following the RBNZ policy announcement. We dipped as far as 1.1260 before some support emerged (last 1.1275/80). There could be some support just under 1.1260, as there were several recent highs around this level. Beyond that is the 50 day MA at 1.1194.

  • Whilst the RBNZ delivered as expected (+50bps), there was likely some concern that the central bank could follow the RBA down a more dovish path. The actual outcome, plus the RBNZ statement, which on balance reads more hawkish relative to the RBA, has likely allayed these fears.
  • This is seeing the AUD/NZD cross play some catch up to the downside with relative yield momentum, see the chart below.

Fig 1: AUD/NZD Versus AU-NZ 2yr Swap Spread

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The AUD/NZD cross has dipped sharply following the RBNZ policy announcement. We dipped as far as 1.1260 before some support emerged (last 1.1275/80). There could be some support just under 1.1260, as there were several recent highs around this level. Beyond that is the 50 day MA at 1.1194.

  • Whilst the RBNZ delivered as expected (+50bps), there was likely some concern that the central bank could follow the RBA down a more dovish path. The actual outcome, plus the RBNZ statement, which on balance reads more hawkish relative to the RBA, has likely allayed these fears.
  • This is seeing the AUD/NZD cross play some catch up to the downside with relative yield momentum, see the chart below.

Fig 1: AUD/NZD Versus AU-NZ 2yr Swap Spread

Keep reading...Show less