Listen to the latest market mood for the AUDNZD pair.

Weak AUD, Strong NZD

Yesterday’s RBNZ meeting resulted in heavy NZD buying as investors see the RBNZ walking back from negative interest rates. Although the RBNZ committee kept the possibility of interest rates alive for next year their assessment was upbeat enough for ANZ and ABS investment banks to change their forward guidance expectations. ABS no longer expect the RBNZ to move to negative interest rates next year and NZ10 year and yields shot higher.

The bond yield spread between the Australian and New Zealand 10 year bond narrowed which indicates further downside ahead in the AUDNZD pair.

Therefore, expect AUDNZD sellers on pullbacks.

Trade Risks: The main risk to this trade is if the outlook for Australia significantly improves compared to New Zealand.