The Australian dollar is under pressure vs. the New Zealand Dollar (AUDNZD) as this week’s two critical events, the RBNZ rate meeting and the Australian Unemployment figures have shifted the mood altogether in the pair. The AUDNZD pair is now trading below the October 22 low of 1.0663, and this has triggered the rectangle pattern made up of the October 22 low and the September high at 1.0845. The rectangle pattern is now suggesting that the AUDUSD pair might slide to the 1.0477 level as the price breached downside of the pattern. The trend will remain downward as long as the price trades decisively below the October 22 low.
Background to the move lower in AUDNZD
Earlier this week, the Reserve Bank of New Zealand (RBNZ) left rates unchanged at 1 percent despite the market projecting a rate cut of 25 basis points. Even though RBNZ Governor Adrian Orr recognized that the inflation pace is still a long way from their 2% target, he said that financial information from August didn’t pressure them to add to “the already stimulatory monetary setting at this time.” Westpac, a large bank in the region, projected correctly that the central bank would not cut rates at the November meeting, and instead insisted that the next move in prices would be in February 2020. The decision to not cut-rate amid market expectations send the New Zealand Dollar higher.
Earlier today, the Australian dollar quickly lost ground after the latest Aussie employment report woefully missed the expectations of the market. Economists anticipated an uptick in work placement of 16,200. Instead, the report for October demonstrated that there were 19,000 job losses. To exacerbate the situation for the Aussie dollar, the joblessness rate ticked higher for October to 5.3% from 5.2% in September.
The combination of a hawkish RBNZ and soft Aussie employment figures send the AUDNZD lower and triggered a breakout of a two-month-old price range.
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