AUD/NZD bears remain in control, targetting 200-DMA

• NZD gains on recent  GDT dairy auction, currency outperforming.  
• AUD/NZD can resume its downside trajectory, targets 200-DMA

AUD/NZD has been better offered on the back of the more dovish than expected Reserve Bank of Australia minutes released in yesterday’s session although is sticking to a relatively narrow range of between1.0620 and 1.0645 in the main.

Dovish RBA minutes do little to prevent a bid in AUD

The RBA minutes did not have a material impact on the market, although the Aussie did drop, as would be expected considering the affirmation that the RBA is leaning with a dovish bias. AUD/USD has recovered back onto the 0.68 handle following a 20 pip fall on the minutes to 0.6785.

The initial knee jerk downside spike came on the back of the minute saying, “a case could be made to ease monetary policy at this meeting.” However, it would seem that there were too many arguments against cutting rates after the three recent cuts. Subsequently, and also considering the lacklustre performance in the US dollar, AUD was more than retracing yesterday’s 20 pip fall.  

Meanwhile, AUD/NZD is also taking its cues from the recent  GDT dairy auction as well as a steady hand from the Reserve Bank of New Zealand of late. The GDT dairy auction resulted in prices overall rising 1.7%, with whole milk powder running up to a three-year high at up 2.2%. Skimmed milk powder was also up 3.3%. Indeed, the outperformer was the bird, which rose from 0.6390 to 0.6429.

AUD/USD & AUD/NZD levels

AUD/USD was recently  rejected in the area of the 200-day moving average and has been respecting the descending trend line resistance. Bulls are now testing the 21-DMA as bulls climb back away from the lower bound of the Bollinger bands  and towards the September rising channel support.  To the downside, the 0.6730s are a line in the sand which guard space to the YTD lows in the 0.6660s. Meanwhile, to the upside, should bulls get back above the 200-DMA, they will look to the 0.7020s areas which meet the 23.6% Fibonacci retracement level of the 2018 highs to July 2019 lows.  

While the bird outperforms, AUD/NZD can resume its downside trajectory within the strongly bearish territories. The 4-hour moving averages remain steeply bearish with price below the    38.2% Fibonacci retracement level of the Aug to YTD highs which guards a run to the 1.0550s and a confluence of the 200-day moving average.