AUD/NZD: Bulls tiring and bears eye a break below 21-DMA

AUD/NZD is sat in the mid 1.0750s, consolidating above a cluster of 4-hour moving averages. The upside attempts are failing around 1.0790 as bulls begin to tire, making a lower high.

The latest data to impact the Aussie had been yesterday's Unemployment Rate that dropped on a seasonally adjusted basis by 0.1% which came as a positive surprise, albeit, perhaps not enough of a drop for the markets to seriously start to discount the prospects of a rate cut.

However, market pricing for the RBA to cut again in November was cut to a modest -6 basis points – Indeed, AUD/USD rallied from under 0.6760 to a high of 0.6791. Overnight, the Australian 3-year government bond yields rose from 0.74% to 0.79% (a one-month high) before settling around 0.75%, the 10-year yield from 1.09% to 1.16% to 1.12%. 

As far as the NZD, the market has been pricing for RBNZ for 25bp of easing on 13 November, with a terminal rate of 0.55% which is likely to cap rallies in the bird and the downside in the cross. "

We continue to expect a further cut in the OCR to 0.75% in November, with rates remaining low for an extended period after that," analysts at Westpac argued, noting the recent Consumer Price index – rising by 0.7% in the September quarter, higher than forecast.

AUD/NZD levels

AUD/NZD has pierced the 21 4-hour moving average to the downside but has been unable to penetrate it ahad of the 50 and 200 4-hour moving averages. The 50-day moving average is located inline with the 1.0660s and recent swing lows which could be a touch area of support. 1.0840 protects a run towards the 1.10 psychological level.