- AUD/NZD trades in the mid 1.06 area ahead of key data this week.
- COVID cases offshore could play in the hands of the antipodean bulls.
Ahead of New Zealand’s Trade Balance, the Kiwi has consolidated at elevated levels following holiday trading conditions yesterday.
The Aussie consolidated between a 50 pip range in the lower half of the 0.71 area.
AUD/NZD is in focus as markets get set for the Aussie Consumer Price Index and awaits to see what the central banks will do next.
At the time of writing, AUD/NZD is trading at 1.0656.
It was a risk-off session overnight in European and US markets pertaining to the surge in the latest coronavirus new cases.
Meanwhile, the antipodeans have so far managed to see off the second round of the virus which could potentially work in the domestic currency’s favour.
Antipodeans off the Covid hook
According to the Worldometer global database, which sources data from national ministries of health and the World Health Organisation, only six nations have definitively emerged from their second wave: Australia, South Korea, Japan, Hong Kong, Vietnam and Singapore.
The series of clusters that arose in Auckland in mid-August never really evolved into a clear second wave, and ultimately, Victoria has performed extremely well by international standards.
”Going forward, the Kiwi’s Achilles heels will be negative interest rates (with fierce debate ongoing as to when that will be – we still expect it in April) and risk appetite,” analysts at ANZ Bank argued.
”But until either of those two things happen, the path of least resistance seems to be higher.”
As for the cross, the analysts argued, ”at the elevated end of trading ranges, and a technical break even isn’t far off, or unimaginable, with the RBA on track to ease next.
Australian CPI data tomorrow is the next key risk event and could be like NZ’s: strong data will likely be ignored/looked through; weak data will be viewed as supporting the case for early/more aggressive easing.”