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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
AUD/NZD has enjoyed a strong run higher since late May, moving from sub 1.1000 to 1.1150 post this week's hawkish RBA surprise. However, yield differential momentum is turning less positive for the cross.
- The chart below overlays AUD/NZD against the 2yr and 10yr AU-NZ government bond differential.
- On a 2yr basis we haven't been able to get much beyond -60bps, while the 10yr differential has moved from a recent high of -15bps back to -22bps.
- NZ yields have bounced today, which follows firmer yield momentum in US and EU markets overnight. However, the RBNZ released details on its plans to unwind its QE program, which has provided a further kicker for NZ yields today.
- While relative economic momentum is still in AUD's favor, if this isn't being reflected in improving yield differentials it should take away one source of upside support for the AUD/NZD cross.
Fig 1: AUD/NZD & Yield Differentials
Source: MNI - Market News/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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