The AUDNZD was slightly higher on the day with New Zealand business PMI showing a print of 50.7, which is straddling the key 50 level between expansion and contraction. The market awaits two key events next Thursday with the release of second quarter GDP for the Kiwi and unemployment numbers for the Aussie currency.
NZ GDP is expected to show a drop of -13.3% from -0.2% in the first quarter. New Zealand’s economy had contracted in 2019 from 3.3% to 1.8% before the coronavirus shutdowns hit trade and domestic growth. The Australian economy has already registered losses of -6.3% for its economic productivity and this could help support the Aussie if their neighbours come in at expectations.
The unemployment number in Australia was a key figure at the turn of the year with RBA Governor Philip Lowe constantly referencing the data as key to the government’s interest rate and stimulus plans. Analyst expectations for the release are a loss of 50k jobs, compared to July’s gain of 114k, while the unemployment rate is expected to come in at 7.7%. Any downward pressure on these numbers could see strength for the Kiwi.
Both economies are export-reliant and have struggled with the economic downturn. For the Aussie, they have also been hit by lower prices in oil and weakness in the important services sector. At present the uptrend still holds but this will depend on next week’s numbers.
The AUDNZD pair is at a critical price level within the current uptrend. The pair now trades at 1.9217 and the target will be the 1.1000 level. The price action here will determine whether we see further gains in the pair, or a potential correction towards the 1.0500 level. The Investing Cube analysts are currently available for one-to-one coaching in the markets, while newer traders can learn new strategies from the Forex Trading Course.