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AUD/NZD: Pressured after RBNZ’s QE proposal, focus on New Zealand trade data

  • AUD/NZD fails to hold onto recovery gains despite upbeat trade sentiment.
  • RBNZ proposes 250 million New Zealand dollar QE in government bonds.
  • Markets cheer the hope of the US COVID-19 Bill, New Zealand trade figures awaited.

Following the RBNZ’s QE proposal, AUD/NZD drops to 1.0220 at the start of Wednesday’s Asian session. The pair earlier benefited from the market’s risk-on while the upcoming New Zealand (NZ) trade numbers for February seems to be the immediate catalyst to watch.

As a part of its first round of Quantitative Easing (QE), the RBNZ proposed to buy 250 million New Zealand dollar worth of government bonds. The news helped trigger the NZD strength while the Aussie pair catch a breath after portraying the market’s upbeat trade sentiment the previous day.

In addition to the increased odds of the US Senate’s likely agreement over the anticipated $2 trillion COVID-19 Bill, the Fed’s unlimited QE and a reduction in Italy’s death rate also helped the markets to shrug off the latest worries due to the coronavirus (COVID-19).

While portraying the trading sentiment, the US 10-year treasury yields grew nine basis points (bps) to 0.86% whereas DJI30 marked its strongest recovery since 2008 by the end of their Tuesday’s trading session.

Looking forward, New Zealand’s February month trade data will be the key to watch. While the headlines Trade Balance (YoY) flashed $-3.87B prior, Exports and Imports stood near $4.73B and $5.07B in January.

It should also be noted that the likely sluggish figures, mainly due to the virus impact, could take clues from the lockdown measures in New Zealand to deter the pair’s latest weakness.

Technical Analysis

21-day EMA near 1.0265 acts as the immediate resistance ahead of 1.0300 upside barrier. Alternatively, 1.0160, 1.0100 and 1.0000 can limit the pair’s near-term downside.

 

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