- Upbeat New Zealand statistics exert additional downside pressure on AUD/NZD.
- Increasing odds of RBA’s rate cuts, comparatively stronger NZ fundamentals keep the pair down.
- Australia’s November month employment report will be the key for now.
New Zealand’s GDP and Trade Balance data recently exerted additional downside pressure on AUD/NZD, at 1.0410 now. The pair slumped to the fresh four-month low just after the data releases from New Zealand (NZ) propelled the broad New Zealand dollar (NZD) strength.
Not only better than forecast quarterly Gross Domestic Product (GDP) figure of 0.6% versus 0.5% expectations, a higher than downwardly revised $-5.07B prior Trade balance, to $-4.82B, also pleased the NZD buyers.
The pair has been witnessing downside off-late as the odds of the rate cuts are high concerning the Reserve Bank of Australia (RBA) than for the Reserve Bank of New Zealand (RBNZ). “Markets are pricing a 60% chance of easing at the Feb RBA meeting, and a terminal rate of 0.41% (RBA cash rate currently at 0.75%). Market pricing for RBNZ implies only a 10% chance of easing in February, with a terminal rate of 0.91% (RBNZ OCR currently at 1.0%),” says Westpac.
Also pleasing the pair sellers are downbeat fundamentals concerning Aussie, mainly due to its higher reliance on China than the New Zealand economy whereas fruits of mid-year rate-cuts have started arriving.
Traders will now look for Australia’s November month employment data for immediate direction. The headlines Employment Change is expected to reverse -19K prior with 14K while seasonally adjusted Unemployment Rate and Participation Rate bear the expectations of being unchanged at 5.3% and 66% respectively.
Technical Analysis
While a one-month-old descending trend line near 1.0430 offers immediate resistance, the quote is likely to be termed strong even for short-term unless rising past-1.0500 mark. Hence, the yearly bottom surrounding 1.0260 stays on the Bears’ radar.
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