AUD struggling against the NZD

The New Zealand dollar (NZD) has been one of the most talked about currencies over the past 12 months, with the Reserve Bank of New Zealand (RBNZ) going through a roller coaster as far as managing policy is concerned.

Source: Bloomberg

Initially, the RBNZ had a tightening bias, which was greeted by aggressive buying of the NZD. However, this all unwound at some stage as inflation came under pressure from falling oil prices and commodity currencies faced some selling.

While most market watchers look at the NZD against the greenback, AUD/NZD has been a big talking point recently with some analysts going as far as saying the pair is headed to parity in coming months.

AUD/NZD topped out just short of $1.0800 in January and has since been descending quite rapidly. Australia commenced easing this month and expectations are rife that we’ll see further easing in coming months.

The pair broke below an uptrend support line at about $1.0550 this week and has come under pressure since then. This subsequently saw it drop below $1.0500 and left the pair vulnerable to a move down to January lows at $1.0355.

On the calendar this week we have Australian jobs numbers, and RBA Governor Glen Stevens testifies in front of the House of Representatives on Friday. These two events could cause some volatility for the pair. I feel traders will consider selling rallies back into the $1.0550 region.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.