AUDNZD was 0.50% lower today after the RBNZ held rates steady as expected. I said in yesterday’s article on the pair that “the price action would favour the downside” and the Kiwi could gain further in the days ahead.
The New Zealand dollar is rising as traders reduce their bets that the RBNZ will move to negative rates in 2021. The bank launched a new Funding for Lending Program which will be aimed at providing cheap loans for banks. In its economic projections, the bank was also less pessimistic about the economy and their expectations for inflation. The moves should boost the Kiwi dollar as other developed countries are slashing rates, such as neighbours Australia who are at a record low of 0.1%.
Australia saw better-than-expected consumer confidence figures with a reading of 107.7 against expectations of 105 for the Westpac indicator. Despite an optimistic consumer the nation saw its unemployment rate tick back up to 6.9% which will be a worry for the central bank and a recovery looks to be a little further out.
RBNZ Governor Adrian Orr didn’t rule out the prospect of negative rates altogether, saying the economy “has proved more resilient” and it was “… too early to tell”. The bank has forecast a a GDP drop of 0.3% in the fourth quarter, with a further 0.2% fall in Q1 2021. On a more positive note, they see the unemployment rate at 6.2% in the same quarter, compared to previous expectations of 8%.
AUDNZD Technical Outlook
The AUDNZD failed at the 1.07500 level and has since fallen to the range lows at 1.0600. This will be the key level for the next path and a close below could see the AUDNZD move to the 1.0500 level. Traders could place a stop above today’s high. The investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.