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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
The AUD/NZD cross continues to oscillate around the 1.0600 level ahead of key event risks tomorrow. We have the RBNZ decision, along with Jan monthly CPI in Australia.
- The RBNZ outcome should have the bigger sway on the cross. An on hold outcome may see a knee jerk move higher in the pair, given some very modest pricing of a hike. Still, the RBNZ outlook will be very important as well, given cuts priced towards the end of this year.
- The AU-NZ 2sy swap spread sits at -110bps, slightly up from recent lows (-117bps), see the chart below.
- Not surprisingly, AUD/NZD overnight vol has spiked, now at 16.6%. This is the highest levels since early 2023. The implied range for the cross in the next session is 1.0504-1.0713 based off a 75% probability.
- Outside of tomorrow central bank driven risk, relative commodity price trends will another watch point for the cross. Since the start of the year such trends have favored NZD over AUD, with metal prices, particularly iron ore weakness in focus amid on-going China demand concerns. In contrast, dairy prices have generally trended higher.
- The other line on the chart is the ratio of AU to NZ commodity prices, proxied with a DB series for AU and CBA series for NZ.
- Key levels to watch include 1.0560/70 (YTD lows Feb 22/May 23, Yearly Lows) a break here could signal a move to 1.0474 (Dec 22 lows), to the upside are 1.0612 highs from Feb 22, above there 1.0650/55 (Feb 20 highs/ 20-day EMA). Currently, the 20 and 50-day EMAs are positioned at 1.0655/1.0705.
Fig 1: AUD/NZD Cross Versus AU-NZ 2yr Spread & Relative Commodity Prices
Source: MNI - Market News/DB/CBA/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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