The Australian Dollar has been kicked around of late on account of slowing metrics out of China as well as jawboning from the Reserve Bank of Australia’s Governor Glenn Stevens who mentioned that the AUD/USD should be trading closer to 0.75. While many of the other G10 currencies from around the world were getting back a little mojo against the USD, the AUD made no ground. As we start the new week, the fortunes for the currency may not change much either as the Mid-Year Economic and Fiscal Outlook is anticipated to bring more bad news.
Meanwhile over in New Zealand, the situation regarding China is exactly the same, but the Reserve Bank of New Zealand is actually sounding a more hawkish tone. The RBNZ’s Governor Graeme Wheeler indicated this past week that further increases in their overnight cash rate is “expected to be required at a later stage.”
Judging by the two stances of the central banks, it would seem to make sense to start buying the NZD and selling the AUD, but markets don’t always make sense; sometimes we have to be a little patient and wait for the right opportunity to perform the obvious. Therefore, when looking at the AUD/NZD currency pair, locating a particular level of resistance that is buoyed by a declining trend line, a strong Fibonacci retracement, and a round number looks like a level worth the patience.
Figure 1:
Source: www.forex.com
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