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Dips Sub 1.0900 Supported

AUDNZD

AUD/NZD dips sub 1.0900 continue to be supported. The pair has been fairly steady around this level since early November. Yesterday we got close to the 1.0880 level post the rise in NZ inflation expectations, but this proved short lived. Bears will seek a break of this level to open up fresh downside. Some resistance appeared on moves above1.0920, but we are around this level currently. Beyond that is recent highs near 1.0980, and then the 200-day EMA a 1.1011.

  • Most cyclical drivers still aren't trending back in AUD's favor, see the chart below of AUD/NZD versus the AU-NZ 2yr swap spread. We are close to October lows for the metric. The equivalent spread on government bond yields is painting a similar picture, albeit up slightly on recent lows.
  • Relative data surprise indices are still around recent lows, but not trending down further against the A$. There has also been some stability in AUD's commodity price basket but not enough to shift relative terms of trade proxies back in the currency's favor.
  • The next big relative data event is likely to be next Wednesday Q3 wages print in Australia, although we do have RBA Deputy Governor Bullock speaking tonight.

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

Source: MNI - Market News/Bloomberg

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