AUD/NZD bulls approach 1.0700 despite Q4 New Zealand GDP’s rebound, Aussie employment eyed
|- AUD/NZD extends recovery from two-month low on softer-than-expected NZ Q4 GDP.
- New Zealand GDP reversed previous contractions but missed upbeat forecasts.
- Ukraine-Russia headlines, China news propel risk-on mood even as Fed hikes rate by 0.25%.
- Australian employment data for February, risk catalysts will be important for fresh impulse.
AUD/NZD justifies New Zealand’s Q4 GDP miss while extending the previous day’s rebound towards 1.0700, around 1.0680 during the early Thursday morning in Asia. The reason for the pair’s latest strength could be linked to the market’s optimism of overcoming the Ukraine-Russia crisis, as well as easing covid fears from China.
New Zealand’s (NZ) fourth quarter (Q4) GDP came in 3.0% and 3.1% QoQ and YoY while reversing the previous contraction of -3.7% and -0.3% respectively. However, market forecasts were too upbeat, 3.2% for the quarter and 3.3% for yearly print, which in turn dented the New Zealand dollar.
Read: New Zealand GDP rebounds but fails to lift NZD
ANZ also raised bars for the AUD/NZD prices as it predicted before the data, “Unfortunately, the prospects for further strong GDP prints over the first half of 2022 in particular are looking weaker by the minute.”
On a different page, progress on the Ukraine-Russia peace talks isn’t clear even as Moscow cheers the nearness of an agreement including ceasefire and withdrawal of Russian troops. However, Ukraine praises the softness of Russian diplomats’ voice and the International Court of Justice in The Hague also ordered Moscow to abandon the Ukraine invasion, which in turn favors risk-on mood.
Elsewhere, a softer COVID-19 daily count from China tames virus woes from the dragon nation and adds to the upbeat sentiment. On the same line were headlines suggesting the government’s readiness to propel economic growth, by China Vice Premier Liu He.
That said, Wall Street portrayed a risk-on mood and the US 10-year Treasury yields gained 2.0% on Wednesday to refresh the highest level since 2019 as the Fed hiked benchmark rate by 0.25% and signaled more.
Looking forward, Australia’s employment data for February will be important for AUD/NZD prices. Forecasts suggest that the headline Unemployment Rate may ease to 4.1% from 4.2% on a seasonally adjusted basis whereas Employment Change could rise from 12.9K to 37K. Along with the data, the RBA Bulletin for Q4 will also be released and should be watched too. However, major attention will be given to risk catalysts as the Reserve Bank of Australia (RBA) is more concerned with the inflation of late.
Read: Australian Employment Preview: Upbeat figures to fuel the optimism-related rally
Technical analysis
A two-week-old descending trend line around 1.0685 holds the key to the further upside of the AUD/NZD prices.
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