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Falls Below $1.10, Rate Differentials Narrowest Since October

AUDNZD

AUD/NZD has pared some of Wednesday's losses as the Q1 GDP print from New Zealand confirmed a technical recession. The cross last prints at $1.0965/75, up ~0.2%.

  • The pair fell below the $1.10 handle yesterday, losses extended post FOMC and the pair closed at its lowest level since June's RBA meeting.
  • Rate differentials, observed via 2 year swaps, sit at -91bps. This is the narrowest since early October, we had been as wide as -165bps in late May.
  • Bears first look to sustain the move below $1.10 targeting the 20-Day EMA at $1.0888.
  • On the upside bulls target the high from June 13 ($1.1049). This opens up YTD highs at $1.1088 and $1.1150 a Fibonacci projection.
  • Today's May Labour Market Report which is due in just under 2 hours presents the next event risk for the pair, the Unemployment Rate is seen holding steady at 3.70%.

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