- AUD/NZD corrective in December as trade-deal gains traciton.
- RBNZ vs RBA sentiment as well as trade-deal fundamentals will be key catalysts for 2020.
AUD/NZD is consolidating between 1.0442/54 in holiday thin markets in the Tokyo opening hour. AUD/NZD has been in a recovery for the month of December, following a sharp drop the prior month with the kiwi leading the way as a top performer and travelling some 220 pips vs the US dollar.
NZD through the worst of it? Aussie jobs to keep RBA on hold?
At this time of year, it’s always a good time to reflect. For the New Zealand economy, it is noted that the 0.7% expansion, QoQ, for the third quarter was quite impressive, all thighs considered. This lead to a bid in the currency, but it will not be long until markets soon come around to the fact that NZ had actually experienced a per capita recession in the first half of 2019 and when considering the revisions that have suggested a sharper slowdown over the first half of 2019, the Reserve Bank of New Zealand will not be too quick to regard the economy has turned a corner.
“The upward surprise in Q3 came from solid primary industries growth, which tends to be volatile, and revisions suggest a sharper slowdown over the first half of 2019,” analysts at ANZ Bank argued.
“Overall, we don’t think this print will change much for the RBNZ, but the good news is that forward-looking indicators suggest a stabilisation in growth going into 2020.”
As for the Reserve Bank of Australia, Australia’s November labour force data was solid and bat expectations by some margin with almost 40k jobs growth and a dip in the unemployment rate to 5.2% – this saw pricing for an RBA cut in Feb drop back below 50% which coupled with the ‘phase-one’ deal traction, can be supportive of the currency into the New Year.
AUD/NZD to correct higher on positive trade-deal traction
All in, some upside adjustment could be expected in the cross, especially should trade talks continue in the right direction. In fact, in recent trade, we have just got the news that China will lower or remove import tariffs on a number of products starting in January 2020. In news at the start of the session, we had both positive and negative sound bites from weekend stories – more on that here.
AUD/NZD levels
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