AUD/NZD jumps 50 pips to near 1.0750 on downbeat New Zealand Q4 GDP, Aussie Employment eyed
|- AUD/NZD picks up bids to rebound from 2.5-month low as NZ Q4 GDP disappoints.
- New Zealand Q4 GDP drops to -0.6% QoQ versus -0.2% expected and 2.0% prior.
- Credit Suisse turmoil previously weighed on the cross-currency pair.
- Australia employment report for February, RBA Bulletin eyed for fresh impulse.
AUD/NZD picks up bids to reverse from the lowest levels in a year, jumping nearly 50 pips to 1.0745 after New Zealand’s (NZ) fourth quarter (Q4) Gross Domestic Product (GDP) disappoints Kiwi traders during early Thursday. The figures become even more worrisome after the global rating giant S&P warned of an NZ rating cut.
NZ Q4 GDP slide to -0.6% QoQ versus -0.2% market forecasts and 2.0% previous readings. Further, the YoY figures also eased to 2.2% compared to 3.3% expected and 6.4% in previous readings.
Also read: Breaking: NZD/USD dumps on big miss in NZ GDP
On Wednesday, Bloomberg quoted Anthony Walker, a director of sovereign ratings for Australia, New Zealand and the Pacific at S&P to mention that "New Zealand’s credit grades with S&P Global Ratings could come under pressure if the nation’s current account deficit remains too big." It should be noted that the national Current Account Deficit shrank to $-9.45B in Q4, from $-10.2B in Q3. However, the Current Account – GDP Ratio slumped to -8.9% from -7.9% prior and -8.4% market forecasts.
Apart from the data at home and fears of the NZ rating cut, the market’s risk-off mood previously weighed on the AUD/NZD prices, mainly due to the Australia Dollar’s (AUD) risk-barometer status. The sentiment soured as the banking crisis reached Europe with a G-SIB – a global systemically important bank, namely Credit Suisse (CS), struggling with its Credit Default Swaps (CDS).
That said, the Yields slumped and the European stock market closed in the red but Wall Street closed mixed as the Swiss National Bank (SNB) stepped forward to help CS.
Looking ahead, AUD/NZD is likely to reverse amid broad risk-off mood and challenges for the AUD. However, today’s Aussie jobs report for February and the Reserve Bank of Australia’s (RBA) fourth-quarter (Q4) Bulletin will be important for the pair traders to watch for fresh impulse.
Technical analysis
Despite the latest rebound, a daily closing beyond a three-week-old resistance line, currently around 1.0735 appears necessary for the AUD/NZD bulls to keep the reins.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.