- AUD/NZD grinds higher after bouncing off two-week low.
- Market’s risk-aversion takes a pause amid quiet start of the key day.
- RBNZ’s likely 50 bps rate hike seems already priced-in and hence a disappointment will be more interesting to watch.
AUD/NZD renews intraday high around 1.01015 as it battles the key hurdle after bouncing off a fortnight low the previous day. That said, the cross-currency pair cheers mildly optimistic market sentiment ahead of the Reserve Bank of New Zealand (RBNZ) Interest Rate Decision.
Global markets began the week on firmer footing before portraying a risk-off day on Tuesday, recently picking pace again, as traders seek confirmations of mixed signals from the major central banks amid inflation growth fears. Even so, softer yields and the US dollar seem to underpin the run-up in Antipodeans. It’s worth noting that the New Zealand Dollar (NZD) seems to have been weighed down of late, despite hawkish expectations from today’s RBNZ, as the widely anticipated 50 bps rate hike is likely already priced-in.
Also weighing on the AUD/NZD prices could be the recent comments from China suggesting more stimulus and efforts tame covid as the nation struggles to justify growth potential. Additionally, a more disappointing outcome of the New Zealand Q1 Retail Sales, -0.5% QoQ versus 8.3% prior, compared to the slightly softer Aussie PMIs also weighs on the quote.
Against this backdrop, the S&P 500 Futures rise half a percent after mixed closing on the Wall Street whereas the US 10-year Treasury yields dropped the most in a week to refresh a one-month low of around 2.717%.
Looking forward, comments from RBA Assistant Governor (Economic) Luci Ellis could offer intermediate clues to the AUD/NZD traders ahead of the key RBNZ.
Read: Reserve Bank of New Zealand Preview: Will they step up their tightening game?
Technical analysis
AUD/NZD bounces off a 10-week-old ascending trend line, around 1.0985, to challenge the weekly resistance line and the 21-DMA near 1.1015.
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