AUD/NZD treading on thin ice as attentions turn to RBNZ

• AUD/NZD consolidates at a key support level as markets eye the RBNZ.
• The divergence between the RBA and RBNZ should be supportive for the bird. 

AUD/NZD is in consolidation during the Thanksgiving celebrations in the US which have seen volumes in markets dwindle to practically non-existant in the forex space.

Overnight, the cross stuck to a 1.0521 and 1.0491 range. 

In early Asia on Friday, the cross is sitting at 1.0507 and its on thin ice, balancing the late November support.

''We think the NZD eventually softens against the AUD, but can’t see a near-term catalyst,'' analysts at ANZ bank explained. 

There is little for the cross to go on at this juncture with the US elections out of the way and a vaccine on the horizon.

Risk sentiment has been favourable to both the Aussie and the kiwi but markets have taken a liking to the bird considering that divergence between the two nation's central banks. 

RBA vs RBNZ

The Reserve Bank of Australia recently shifted its stance in a more dovish direction, cutting the key policy rates and significantly expanding its QE programme.

In contrast, analysts at Westpac argued that ''the Reserve Bank of New Zealand Monetary Policy Statement this week will need to acknowledge the economy (especially housing) has been stronger than forecast, and while it will announce a cheap bank funding scheme (FLP), we expect signalling about a negative OCR to either remain unchanged or be softened.''

''Yields spreads near term should thus favour the NZD over the AUD,'' the analysts argued.

''Longer term, though, the opposite could be true, if the RBNZ cuts the OCR to -0.50% by August 2021 (our current forecast). That should push the cross to 1.10 by March 2021.''