AUD/NZD regains 1.0300 and beyond, a Big week ahead

The cross in the AUD/NZD regained the bids and extended its bullish momentum for the third straight session this Monday, mainly driven by broad AUD strength amid holiday-thinned markets.

AUD/NZD eyes 20-DMA at 1.0338

The AUD/NZD pair now advances 0.09% to 1.0316, having posted fresh session tops at 1.0322 some minutes ago. The latest leg higher in the cross can be largely attributed to strengthening AUD/USD pair in response to the latest headlines from the Australian treasurer Morrison.

While lower global yields seen last Friday also somewhat supported the upside in the Aussie, as markets seek to higher-yielding Emerging Market currencies such as the AUD.

While on the NZS-side of the story, the bulls remain on the back foot heading into the NZ GDT auction results and RBNZ policy decision due in the week ahead, with markets expecting steady policy this  month, but more easing in the upcoming months.

Analysts at Nomura noted, “Economic data since the last meeting have reflected strong domestic demand on the back of impressive gains on the labour market front. Overall, we judge that another rate cut is very likely before the end of the year.”

“The timing is likely to be a function of how NZD trades, and we expect any meaningful depreciation to delay the need for a cut. However, given the RBNZ’s continued concerns about the housing market and its impact on financial stability risks, we do not believe that a rate cut is imminent at the next meeting. We believe the RBNZ will cut its policy rate by another 25bp in November.”

AUD/NZD Technical Levels

To the upside, the next resistance is located at 1.0338 (20-DMA) and above which it could extend gains to at 1.0400 (round number).To the downside immediate support might be located 1.0295/92 (10 & 5-DMA) below that at 1.0250 (psychological levels).