AUD/NZD 1.10 Top?

AUD/NZD 1.10 Top?

AUD/NZD 1.10 Top?

1.10 is a big round number and it is tempting to call a top for AUD/NZD under this technically and psychologically significant level. On a technical basis, this also represents the 50-period SMA on the weekly chart but AUD/NZD is coming from a low base and could easily shoot to 1.12. Fundamentally, there are sound reasons why AUD is outperforming NZD. The Reserve Bank of Australia has been relatively optimistic and next week’s minutes should reflect that whereas the Reserve Bank of New Zealand has more to be worried about. The RBNZ meets next week and we think they will attempt to talk down the currency. Since their last meeting in February, consumer spending has fallen, GDP growth slowed, the trade deficit widened while dairy prices declined. There was some strength in the services and manufacturing sectors but with the currency so strong, we don’t think that will be enough to ease the central bank’s concerns. As a result, NZD could fall on RBNZ, which makes a failure at 1.10 far from certain.

Chart Of The Day

Leave a Comment

Your email address will not be published. Required fields are marked *