AUDNZD Stalling Ahead of 1.0900?

Chart Of The Day

AUDNZD put in quite a run over the past week gaining nearly 200 pips during that time. The rally has been driven by dovish RBNZ stance which suggested that it may actually lower rates in the near future. Meanwhile, the RBA remains resolutely neutral and the eco data has been steady, indicating that after nearly two years of inaction the central bank may want to reconsider its posture.

Tonight’s AU employment data could provide a strong clue to the strength of AU economy. If labor conditions continue to tighten further the gap between AU and NZ yields on the long part of the curve will widen out further and the pair could push towards the key 110.00 barrier. However, if the numbers miss, so rebalancing is due and the pair could retrace back to 108.00 by end of the week.

USDJPY – 109.00 in View?

USDJPY – 109.00 in View?

Chart Of The Day

USD/JPY continues to be under pressure as US yields sink lower. The benchmark 10 years is at 2.20% as the market increasingly begins to doubt the fact that the Fed will hike rates any further beyond the 25bp factored in for tomorrow’s rate hike.

Despite the generally hawkish posture of US monetary officials, US data has been woefully disappointing and the much-vaunted rebound in second half of 2017 is nowhere to be seen as growth continues to track at about 2% rate. The end result is that market expectations have gradually declined from 4 rates hikes this year to 3 to now only 2. The Fed funds futures project only a 42% chance of any additional rate hikes beyond the June hike expected this week.

Meanwhile, technically the pair is making a series of lower highs and could target a move towards 108.50 if the news tomorrow is dovish

AUD/NZD – 1.0900 in View?

AUD/NZD – 1.0900 in View?

Chart Of The Day

Fundamentals

The sharp turn upwards in the AUD/NZD pair has taken many traders by surprise as the cross was supposed to be a one way trip to parity given the expected widening of interest rate differentials in the pair. However the recent rebound suggests that the market assumptions may be incorrect. The Aussie has managed to shrug off the worries about the China slowdown as the economy Down Under continues to perform well despite the drop off in demand for mining products. Today’s AU Retail Sales could prove crucial in demonstrating this resilience. If the number beats the modest 0.4% expectations the Aussie could rally further and take out the 9300 level with force. The kiwi meanwhile has been hobbled by the news that dairy auction prices were much lower than expected, casting doubt on growth going forward. With pair having stalled at the 8700 level once again, the kiwi is vulnerable to further profit taking and that could push the AUD/NZD cross towards the key 1.0900 level.

Technicals

AUD/NZD break above 1.0800 now brings the 1.0900 figure into view as the pair looks to challenge the recent highs. A break above the 1.0900 opens a run to the key 1.1000 level while only a move below 1.0650 resumes the bearish bias