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AUD/NZD stalling, due a sizeable correction at resistance depending on Aussie data

  • Aussie data in focus: We have the Australian consumer sentiment has been volatile this year.
  • RBA more likely to cut than the RBNZ next meeting around. 

AUD/NZD is currently trading at 1.0686 and is forming a top on the charts having made an impressive advance since the start of August and has met resistance at April-May tops.  

The driver behind the move has been better than expected Aussie data and the Reserve Bank of New Zealand racing to the bottom. However, of recent trade, we have seen NAB reported Australian business confidence weakened in August, sending AUD/USD down to near 0.6850 which has weighed on the cross while the bird has been defying gravity and shorts have been pared back to some extent - Eys will be on the Yuan fixing today following yesterday's strong fix which supported the Aussie. 

Also, it is worth noting that the Australian 3-year government bond yields have been firmer,  rising from 0.84% to 0.90%, while the 10s' climbed from 1.08% to 1.15%. However, expectations are a little higher for the Reserve Bank of Australia to cut rates next time around compared to the RBNZ which has already done 5 basis points at their last meeting - getting ahead of the curve.

"Markets are pricing 8bp of easing at the October RBA meeting, and a terminal rate of 0.51% (RBA cash rate currently at 1.0%). Market pricing for RBNZ is for 3bp of easing on 25 September, with a terminal rate of 0.62%," analysts at Westpac noted. 

Aussie consumer confidence on the cards

Looking ahead fo the day, we have the Australian consumer sentiment has been volatile this year in the Westpac-Melbourne Institute survey (10:30am Syd/8:30am Sing/HK), including -4.1% in July then +3.6% in August. "The latter move came despite worrying headlines on trade wars and accompanying equity turbulence. It left the headline index at a very neutral 100.0. Today’s survey was conducted 2-7 September i.e. including the RBA’s steady hand and Q2 GDP report, which matched consensus but was spun mostly negatively in the media, given the weak y/y pace," analysts at Westpac explained. 

AUD/NZD levels


 

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