AUDNZD is making a comeback in Asia after suffering a huge sell-off in recent weeks. In mid-July the pair bounced off an important resistance zone around 1.1400 before drifting almost 500 pips lower to a support zone around 1.0900. Since then AUDNZD has regained some of this lost ground, despite softer than expected economic data out of Australia and mildly hawkish comments from RBNZ Governor Wheeler.
Yesterday, Wheeler noted during a speech that whilst further interest rate cuts are likely, the economy doesn’t require severe monetary policy loosening. This helped spark a rally in the kiwi, with NZDUSD jumping through 0.6700 on the back of the comments.
Today, softer than expected trade price and building approvals numbers from Australia hit the aussie. Australian building approvals fell 8.2% in June, significantly more than an expected 1% fall. Also, Australia’s export price index fell more than expected in Q2, dropping 4.4% q/q (exp. -4.0%), its biggest decline since the same quarter last year.
Nonetheless, the Australian dollar is up in Asia, with AUDUSD holding its ground above 0.7300, and the kiwi is drifting lower. With both sides supporting AUDNZD at the moment, the pair has entered and a pivotal zone for price; a break may reinvigorate AUDNZD bulls, while a failure may see bears retake control of price. There are some technical indications that bulls may be gathering, but this is going to be a tough zone for price to break through…