AUD/NZD hits 7-week low, penetrates 100-day SMA support after RBNZ rate decision

• AUD/NZD drops as the Reserve Bank of New Zealand keeps rates unchanged. 
• The central bank leaves the door open for negative rates and foreign QE.

AUD/NZD fell from 1.0814 to 1.0750, the lowest level since Aug. 4, after the Reserve Bank of New Zealand kept interest rates and the large scale asset purchase program’s size unchanged as expected. 

The pair dipped below the 100-day simple moving average (SMA) for the first time since April 9. The SMA is currently located at 1.0767.

The policy statement said that the balance of economic risks is skewed to the downside, and progress is being made on additional monetary tools. The central bank reiterated that negative interest rates and purchases of foreign bonds remain a policy option. That, however, failed to weaken the New Zealand dollar. 

The pair may extend the decline, as Australia reported a 4.2% month-on-month decline in August Retail Sales early Wednesday. The weak data validated the Reserve Bank of Australia’s recent view that Australia’s economic rebound has been gradual and even and a quick recovery from recession looks unlikely. As such, the Aussie dollar bulls could remain on the sidelines. 

Technical levels