February 3, 2023

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AUD/NZD stays on track to test the December lows

1 min read

AUD/NZD down another 0.4% to the lowest since 3 December 2020

AUD/NZD D1 04-08
The pair continues to trade on the divergence between the economic and monetary policy situations, with the latest being the stellar NZ jobs report earlier today here.

That effectively seals rate hike expectations for the RBNZ this month and has prompted another push higher in the kiwi, with AUD/NZD now keeping below 1.0500.

Since breaking the trendline support at around 1.0650, sellers have kept the downside momentum going for the most part – leaning on the 1.0600 handle as well when it comes to limiting any bounce or pullback in the pair over the past two weeks.

And it looks like there is the perfect catalyst for a sharper move lower now as the downside leg sees fresh momentum. The December lows @ 1.0418-23 is the next obvious target and I reckon that could see some profit-taking activity come about.

But if the RBNZ effectively kicks off the tightening cycle this month and reaffirms that they will continue to hike rates further before the end of the year, any dips or pullbacks in the kiwi is but an opportunity to buy into still.

More so if the virus and economic situation in Australia continues to serve up some uncertainty as it has recently, despite the RBA not changing its tapering stance for now.

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