AUDNZD in focus ahead of RBA
FOREX.com July 3, 2017 3:04 PM
The Reserve Bank of Australia is unlikely to change interest rates tonight from the current historic low rate of 1.5 per cent. But it may become the latest central bank to turn hawkish following three months of stronger-than-expected jobs growth in Australia, improvement in Chinese economy and stable financial conditions around the world.
The Reserve Bank of Australia is unlikely to change interest rates tonight from the current historic low rate of 1.5 per cent. But it may become the latest central bank to turn hawkish following three months of stronger-than-expected jobs growth in Australia, improvement in Chinese economy and stable financial conditions around the world. If the RBA does turn hawkish then the AUD/USD may become the latest dollar pair to break out of its long-term consolidation range to the upside, as we pointed out the possibility on Friday.
However, those who prefer not to focus on the US dollar ahead of the July 4 holiday and Friday’s nonfarm payrolls report, may wish to look at an Aussie cross instead. The AUD/NZD is one example. This pair had been falling sharply since mid-March as the New Zealand dollar firmed up on the back of a hawkish RBNZ and improvement in New Zealand data. However, it looks like this pair has put in a short-term bottom around the technically important 1.0380/5 level.
As can be seen from the chart, this 1.0380/5 level was the last resistance prior to the breakout back in early February. Once resistance, it has turned into support. So far however we haven’t seen a break above the most recent high at 1.0535/50 area. If and when price moves above here, would then we would have our first higher high and thus a break in market structure. Once this condition is met then we can expect to see higher levels on AUD/NZD.
But if the 1.0380/5 support breaks first then all bets would be off. In this case, we wouldn’t be surprised if the AUD/NZD eventually drops to parity.
Source: eSignal and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.