AUD/NZD threatening the downside support level but not enough steam

  • AUD/NZD is testing the downside within the broader consolidation area, not expected to break out at this stage one way or the other. 
  • AUD/NZD is currently trading at 1.0404 from a high of 1.0445 and a low of 1.0389.
  • Overnight, the AUD/NZD extended post-RBA gains to 1.0437, but the cross has dropped in Tokyo on the GDP data, but the downside is limited considering RBA’s Lowe who was speaking prior to the data release, reassuring markets that inflation will get back to the middle of the 2-3 pct band and that the adjustment in the housing market is manageable for the overall economy.  The data arrived as follows: 

  • Aussie GDP comes in as a miss of 0.2% Y/Y and a miss of 0.1% Q/Q (Aussie lower)

  • Overnight, analysts at Westpac noted that the GDT dairy auction resulted in the composite price rising by 3.3%, with whole milk powder up 6.0% (similar to earlier futures market predictions), skimmed milk powder down 4.3%, and butter up 3.7%. AUD/NZD levels The pair is moving lower towards the floor of the rising support around 1.0380 which guards the 1.0365 support lines ahead of a deeper leg towards 1.0310 and 1.0220 on the wide. On the flipside, a rise to the upside will look to test the descending trend line resistance on the daily sticks located around 1.0450/60 and comes as a possible breakup area where bulls will look ahead to the 38.2% Fibo retracement target of the late 2018 downtrend from 1.1175 – This is located at 1.0568. 

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