AUD/NZD on thin ice in bearish territory, balancing on a 38.2% Fibo support level

The AUD/NZD pair was little moved overnight, extending along a sideways trajectory between 1.06 and 1.0650 in the main. Today, the cross is up a fraction of a percentage point having traded between 1.0624 and 1.0645. 

It's been a lacklustre start for the commodity-FX space, but today's focus will turn to the minutes of the November Reserve Bank of Australia meeting due today. Traders will be interested to see what they are able to glean from the text.

RBA minutes coming up

It will be interesting to see if there is any concern for the employment in the nation that fell 19k in October. The data indicated the first drop in three years, while illustrating that rate cuts have not been particularly supportive of the Aussie jobs market. There has also been a wage growth slowdown, seen in the Q3 Wage Price Index. 

What we have seen is a sharp rise in housing prices which usually helps out the consumer and retail sector. However, this all takes time and market sentiment remains that the central bank leans with a dovish bias. Should the RBA cut further, AUD will likely find its self on the receiving end of a market fleeing from it which opens the case of a test below the psychological 0.65 handle – "Markets are pricing a 20% chance of easing at the Dec RBA meeting, and a terminal rate of 0.50% (RBA cash rate currently at 0.75%)," analysts at Westpac noted.

RBNZ surprised financial markets with surprise hold, wait and see

On the other end of the cross, the NZD has been holding territories above the 200-hour moving average as well as the 21-day moving following a surprise outcome for financial markets when the RBNZ did not cut interest rates when it met last week. However, at least the door is ajar and observers have their eyes on an OCR  down to 0.5% which is bearish for the bird – "Market pricing for RBNZ implies a 40% chance of easing in February, with a terminal rate of 0.84%," analysts at Westpac pointed out. 

AUD/USD & AUD/NZD levels

Firstly, looking to AUD/USD, it has been capped by the vicinity of the 200-day moving average at the start of this month with the price respecting the descending trend line resistance. The pair dropped below the 21-DMA which brings in the lower bound of the Bollinger bands on a break of the September rising channel support. 0.6730s are a line in the sand which guard space to the YTD lows in the 0.6660s before the 0.65 handle. On a break of the 200-DMA, bulls will seek a run to the 0.7020s which meets the 23.6% Fibonacci retracement level of the 2018 highs to July 2019 lows. 

For the cross, AUD/NZD, it is in strongly bearish territories at this juncture. The 4-hour moving averages are steeply bearish and the cross is now testing the 38.2% Fibonacci retracement level of the Aug to YTD highs. This is a level that meets the Sep lows and should it give our, bears will be licking their lips for a test back to the 1.0550s and a confluence of the 200-day moving average.