Listen to the latest market mood for the AUDNZD pair.
The NZD remains weak after the deputy Governor Geoff Bascand clarified that the RBNZ would like to be ready for negative rates by the end of the year. The RBNZ is now opening the door to allow negative interest rates which will result in further NZD weakness today.
Despite the AUD seeing reasons for weakness yesterday from a very poor employment report which showed a fall in employment of nearly 600K the Reserve Bank of Australia, by contrast, is less inclined to negative rates and does not favour them.
- The other positive aspect of trading the AUD and the NZD together is that both pairs rise and fall with changing risk tones. So, as risk has been switching between ‘on’ and ‘off’ during the last few session this is a good pair to look for buyers on for today.
- Any return to the 1.0700 area should find buyers.
- We expect this outlook to play out over the next 8-12 hours.
Trade Risks to this outlook
- A fast domestic recovery from New Zealand may negate the need for negative interest rates.
- Further US/China trade war tensions will impact risk and result in more AUD weakness than NZD weakness.
- Faster than expected global COVID19 recovery will also negate this outlook as central banks will most likely start to look at raising interest rates together.