Widening Rate Differentials Weigh

Widening rate differentials, in the wake of yesterday's NZ budget, have weighed on AUD/NZD as the pair printed its lowest level since 11 May before marginally paring losses.

• BNZ adding 25bps to their RBNZ rate projection also weighed, the bank now sees the RBNZ raising the OCR to 5.75% in July.
• Rate differentials, observed via 2 year swap rates, sit at -158bps a touch above cycle lows of -165bps. On Wednesday the spread was at -135bps.
• Bears look to target low from 5 April ($1.0588), a break through here opens up 2022 lows at $1.0471.
• On the upside bulls first look to break 20-Day EMA ($1.0702), from here they can target the 200-Day EMA ($1.0838).
• On the wires in ~10 minutes we have NZ April Trade Balance, there is no estimate the prior read was a deficit of $1.273bn.