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Market mood AUD/NZD: AUD supported by US stocks [Video]

Listen to the latest market mood for the AUDNZD pair.

Strong AUD, Weak NZD

The outlook for the AUDNZD pair has more upside in the present market conditions.

The AUD has been strong as US stocks have been supported over the last few weeks. The AUD is closely correlated to the S&P500, so as it rises the AUD is supported too.

The NZD has been weak as the RBNZ has made a bearish monetary policy move. Bond purchases have been increased by $40 billion to $100 billion and the program has been extended to over 20 months from 12 months. The RBNZ is also opening the door to negative interest rates in order to try and stimulate the economy.

Therefore, expect AUDNZD buyers medium term from any return to the descending trend line on the weekly chart.

Trade Risks:

  • If we see strong risk off sentiment enter the market that can result in more AUD weakness than NZD weakness and invalidate the outlook.

  • A fresh flare up in any US-Chinese tensions/disputes will also result in more AUD weakness than the NZD and invalidate this outlook.


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Author

Giles Coghlan LLB, Lth, MA

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

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