This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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.