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  • AUD/NZD holding firm aha of the RBA in a risk-on environment.
  • AUD catching abid across the board as new cases of COVID-19 slow.

AUD/NZD has been drifting higher his week and has already broken yesterday’s high and resistance as risk-on markets see the Australian dollar outperforming. At the time of writing, AUD/NZD is trading at 0.6126, between a low of 0.6075 and a high of 0.6128, +0.63% on the session so far in Asia ahead of the Reserve Bank of Australia’s interest rate decision. 

First of all, we have just had the Australian Trade Balance. In seasonally adjusted terms, the balance on goods and services was a surplus of $4,361m in February 2020, a decrease of $384m on the surplus in January 2020. There was a muted reaction to the data though and there was a fall in both exports and imports which was to be expected considering the COVID-19 crisis. 

Markets are taking the viewpoint that there will be a peak at some stage

Instead, markets are taking the viewpoint that there will be a peak at some stage (perhaps sooner than later) and the economies around the world will start to get back to some form of ‘normality’, with there being a light at the end of the tunnel. The cases of contagion have slowed and today’s data showed no new cases in Hubei again. Markets are higher and the Aussie is catching a bid.

Meanwhile, the RBA’s policy rate decision is due but with the cash rate at its “effective lower bound”, the focus is now on the RBA’s yield curve control. “Of interest will be the Board’s assessment of their measures thus far, and whether an adjustment is required. Westpac does not expect any adjustments to be made at the April meeting,” analysts at Westpac explained. 

AUD/NZD levels