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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUDNZD
Judging by the decline in the AU-NZ 2yr swap spread after today’s RBA hike, down to -107bps, versus -67bps yesterday, the AUD/NZD may see further downside traction. The chart below plots the AUD/NZD cross against this swap spread.
- The cross was 1.1415/20 prior to the print, but we now sit under 1.1340/45. The 1.1320/30 region could offer support, while beyond that is the low 1.1300 and then a number of highs just above 1.1250 from mid September. On the top side, recent highs around 1.1420/40 may offer resistance.
Fig 1: AUD/NZD Versus 2yr Swap Spread
Source: MNI - Market News/Bloomberg
- The clear caveats are we have tomorrow's RBNZ decision. A 50bps move here is widely expected. After today's RBA outcome, the market may be a little nervous on what the central bank delivers, although the RBA was more vocal in the lead up to this meeting around slowing the pace of hikes.
- The other is the generally negative correlation between AUD/NZD and global equities this year, see the second chart below. Note global equities are inverted on the chart.
- NZD has been more sensitive to risk off episodes, likely owing to its much weaker external account position. This is not a factor today but could come back at some stage.
Fig 2: AUD/NZD & Global Equities
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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