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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.
AUDNZD
Widening rate differentials post the weaker than expected inflation and GDP prints in Australia point to potential further downside in AUD/NZD.
- Rate differentials sit at -127bps, ~12bps wider today. The chart below overlays AUD/NZD against the 2yr spread.
- Jan CPI printed at 7.4%, lower than the expected 8.1%. Q4 GDP printed 0.5% QoQ vs 0.8% exp. RBA terminal rate expectations sit below 4.2% vs 4.35% pre-data.
- The one positive offset can come from firmer China data outcomes. The cross stabilized post the release of the China PMI's showing the A$ has a higher beta with respect to China developments. This is something to be mindful of as we progress into the People's Congress this weekend.
- Still, AUD/NZD broke below its 200-Day EMA yesterday, in the absence of any overt headline driver, which suggests technical flows may have been the catalyst. Bears now target the 2023 low at $1.0708, bulls look to regain the $1.10 handle.
Fig 1: AUD/NZD Versus 2yr AU-NZ Swap Spread
Source: MNI/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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