- AUD/NZD continues higher on improved trade sentiment and risk appetite.
- Weaker domestic data lately should remain the core drivers at play.
AUD/NZD continues to climb within its northerly trajectory and extends within the ascending channel. Currently, AUD/NZD is trading at 1.0659, higher by 0.54% since yesterday’s trade.
Overnight, the AUD finished higher against most major crosses, except the USD, as markets took a breather from trade worries. In contrast, the NZD again underperformed, as the AUD benefited more from the prospects of US-China talks. However, both of the currencies have struggled of late under dovish central banks and the trade war headlines.
Eyes on RBNZ/RBA
In an improved environment, they can enjoy a short term lift, but the weaker domestic data lately should remain the core drivers at play. For now, the bird is taking the brunt of the central bank play, considering the central bank’s recent dovish hand shown to all at the table with the surprise 50 basis point cut.
The Aussie is always going to benefit the most from trade war sentiment and that is what we are seeing here What could now backfire is the central banks play considering the Reserve Bank of New Zealand has made the first move and the Reserve Bank of Australia may have to lay catch up which is yet to be fully priced in.
On the other hand, any poor data form New Zealand is going to continue to weigh on the bird as it just builds the case for further easing to follow and in the near term. Yesterday’s business confidence was a huge blow of the Kiwi and has set the stage or deeper rate cuts to come.
AUD/NZD levels
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