AUD/NZD clocks 18-month high on RBNZ mandate uncertainty

AUD/NZD rose to a 18-month high of 1.1254 this Friday morning as investors offered NZD on uncertainty around the RBNZ mandate under the new government.

A Bloomberg Quint report says, "Investors are concerned the economy will slow as the new government boosts social spending and changes the Reserve Bank of New Zealand’s mandate to seek full employment in addition to price stability, potentially eroding the kiwi’s interest-rate advantage over developed-nation peers."

However, analysts believe the long-run fundamentals are still attractive and the Kiwi would regain poise once there is more clarity about the monetary policy outlook.

At the time of writing, the currency pair is trading at 1.1240.

AUD/NZD Technical Levels

A break above 1.1271 (Apr 2016 high) would open up upside towards 1.13 (zero levels) and 1.1333 (Mar 2016 high). On the downside, breach of support at 1.1193 (support on 1-hour chart) could yield a pull back to 1.1144 (July high) and 1.11 (zero levels).