AUD/NZD tanks on heightened odds of RBA rate cut

All love is lost between AUD and markets following the release of a dismal Aussie inflation data.

AUD/NZD dropped to a session low of 1.0414; down 0.40% on the day.

Australia short duration bond yields drop

The two-year yield fell one basis point, while the 3-year yield shed close to two basis points. The weakness in the yields at the short-end of the curve highlights heightened odds of the RBA rate cut.

The markets were pricing-in only 8% probability of RBA rate cut ahead of the data release. This means, there is scope for a further drop in the Aussie.

AUD/NZD Technical Levels

The cross was last seen trading around 1.0420. A break below 1.04 (zero figure) would expose support at 1.0375 (Dec 14 low), under which losses could be extended to 1.0362 (76.4% of Sep low - Oct high). On the other hand, a break above 1.0441 (previous day’s low) would shift risk in favor of a rise to 1.0465 (Jan 18 low) and 1.05 (100-DMA).