Listen to the latest market mood for the AUDNZD pair.

The risk tone is broadly more positive as Asian equity markets trade broadly higher on the day. Yesterday’s threat that US President Trump would issue a tariff warning to China has faded somewhat today with the US administration saying that tariffs would not be raised on China if terms were kept of the January trade deal.

However, the AUD outlook looks bleak with real yields in Australia looking to be deeply negative and therefore removing a long term support for AUD. The NZD should outperform the AUD as the country is the fastest performer to recover from its COVID 19 outbreak.

• Therefore, if this outlook remains, expect AUDNZD selling at market and pullbacks
• We expect this trade to play out over the next 1-2 weeks.

The main risk to this outlook:

• Any positive news on COVID19 in relation to treatment/cure.
• Any further stepping down of the US-China trade war rhetoric will boost the AUD.