AUD/NZD hits 7-month low on RBNZ house price news

• AUD/NZD drops to the lowest level since April 14.
• New Zealand proposes adding house prices to central bank remit, sending the NZD higher.

The bid tone around the Kiwi strengthened, pushing AUD/NZD down to multi-month lows after New Zealand’s government proposed amending the Reserve Bank of New Zealand’s remit to include stability in house prices as a factor for monetary policy.

“With an extended period of low-interest rates, and sometime before housing supply can catch up with demand, now is the time to consider how the Reserve Bank may contribute to a stable housing market,” Finance Minister Grant Robertson said Tuesday in Wellington. “I want to be clear I am not proposing any changes to the mandate or the independence of the Reserve Bank.

“If implemented, Robertson’s recommendation would dash hopes for additional easing in the form of negative rates or bigger bond purchases, as the property prices have soared this year in the wake of coronavirus pandemic and record-low borrowing costs. That explains the NZD’s positive reaction to Robertson’s comments.

Australia reported preliminary trade data for October. Exports rose 6% month-on-month while imports increased 8%, resulting in a trade surplus of AUD 4,840 million versus AUD 5,630 million in September. The decline in surplus was anything but AUD positive and did little to put a floor under AUD/NZD.

The pair fell to 1.0472, the lowest level since April 14, before recovering slightly to 1.0489.

Technical levels