Dips Post RBNZ Have Been Supported

AUD/NZD is back to the top end of its range for the past week or so. We currently sit at 1.1075. We haven't been able to see much topside beyond the 1.1080 level over this period and beyond this is the earlier August highs around 1.1125. Still, the cross is back above both the 100 day MA (1.1019) and the 50 day (1.1055). We are also around 0.75% above the post RBNZ lows (~1.0990).

• Yield momentum is shifting back in favor of the A$, albeit with spreads still within familiar ranges. The 2yr swap spread is back to -50bps versus -63bps immediately post RBNZ.
• The other differentiator has been the morning's NZ trade figures for July, which continues to highlight the divergence in relative current account backdrops between the two economies. NZ is posting record wide trade deficits (for the past 12 months) against Australia's record trade surpluses.
• It may be the case that the yield differential needs to break higher in AUD's favor to push the cross to sustainable higher levels (above 1.1100, challenging 1.1200 etc). However, dips could still be supported given the relative current account differential.
• Next week's calendar is light in Australia, with just the preliminary PMIs on tap for August (out on Tuesday). There will be slightly more interest in NZ releases, with Q2 retail sales volumes out (market expects a 1.7% rise, versus -0.5% in Q1). This data is out on Wednesday, followed by the ANZ consumer confidence number on Thursday.