AUD/NZD refreshes 17-month low after NZ Q2 GDP, focus on Aussie employment
- AUD/NZD prints three-day south-run drops to fresh low since April 2020 after NZ GDP.
- New Zealand Q2 GDP rose past forecasts on QoQ and YoY, inflated RBNZ rate hike odds.
- Market sentiment remains bright on Fed tapering concerns, ignores AUKUS challenges.
- Australian jobs report for August becomes the key after RBA’s Lowe struck downbeat comments.
AUD/NZD justifies the firmer New Zealand GDP figures while taking offers around 1.0290, following a slump to the lowest since April 2020 near 1.0280 during Thursday’s Asian session. In doing so, the pair bears ignore the recent challenges to the market sentiment as well as cautious mood ahead of the Australia employment report for August.
New Zealand's (NZ) second-quarter (Q2) GDP rose past 1.3% QoQ forecast to 2.8% while the previous readings were revised down to 1.4% versus 1.6%. Further, the YoY figures were brighter, as expected, while rising to 17.4% from upwardly revised 2.9% previous readouts and 16.3% market consensus.
Read: Breaking: New Zealand GDP smashes expectations at 2.8% vs 1.3% exp QoQ
It’s worth noting that the mildly bid S&P 500 Futures, despite the AUKUS deal and uncertainty ahead of the key Aussie data, fails to direct the AUD/NZD moves of late.
Australia-UK-US signed a trilateral security pact to keep China in check. In response, China’s US embassy said, “The three should shake off their cold war mentality and ideological prejudice.”
During the previous day, risk appetite remained firmer amid receding odds of the Fed tapering and vaccine optimism even as US-China tussles, over Taiwan, joined the virus woes to tame the optimism. Also to note, China’s downbeat Retail Sales and Industrial Production challenged the pair bears.
Given the increasing odds of monetary policy divergence between the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ), AUD/NZD is likely to stay pressured near the multi-month low. For that matter, today’s Aussie employment data will be important to watch as the forecasts suggest downbeat prints and RBA Governor has signaled bearish bias during early week.
Read: Australian Employment Preview: AUD to remain under pressure on weak August jobs report
Technical analysis
A three-month-old descending trend channel keeps directing AUD/NZD to the south. That said, the cross-currency pair is near the channel’s support of 1.0260 by the press time.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
