Back To The Lower End Of Recent Ranges

The AUD/NZD cross has moved back into the lower end of its recent range, last sitting around 1.0910. The pair lost just over 0.50% through Thursday's session. News that Fonterra is divest from its Chilean operations (NZD1.055bn, see this link) may have aided NZD sentiment.

• We remain below all key MAs. the 20-day EMA comes in 1.0993, while the 200-day is at 1.1008. Bulls will be looking for a break above these levels to establish a more positive outlook, while bears will be looking for a move through recent lows around 1.0875 to see fresh downside.
• This week's better data outcomes in Australia has tilted relative data momentum back in AUD's favor but we are still coming from relatively depressed levels. Government bond yield spreads are up from recent lows, but this is less evident in the swap space. The AU-NZ 2yr swap spread was around -120bps, close to November lows of -125bps.
• Next week's event risks are more skewed towards NZD, with the RBNZ decision due on Wednesday. Market pricing is split between a 50 and 75bps move (with 4.13% the implied rate currently based off OIS, against a current policy rate of 3.50%).
• Note the evening before this decision, RBA Governor Lowe speaks on "Price Stability, the Supply Side and Prosperity".