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Firms Above $1.10, Rate Differentials Narrow

AUDNZD

AUD/NZD firmed ~0.9% yesterday breaking back above $1.10, resistance was seen at the top of the recent range ahead of $1.1050. The pair last prints at $1.1025/35.

  • Rate differentials, observed via 2 year swaps, rose to their narrowest level since early October 2022 before widening a touch to sit at -88bps. We had been as wide as -165bps in late May.
  • The pair has observed a $1.0950/1.1050 for the most part in recent dealing, bulls look to target a break of yesterday's high $1.1049 which opens the year to date high at $1.1088 and $1.1162 a Fibonacci projection.
  • Bears target the 20-Day EMA at $1.0908 to turn the upward momentum.
  • Looking ahead the local dockets are both relatively light next week. May PSI and Trade Balance provide the highlight in NZ, whilst in Australia Judo Bank PMIs cross.

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