AUD/NZD Technicals – Dovish RBA spoils rally

Kiwi has been outperforming its neighbor’s counterpart, with prices falling from 2011 high of 1.38 to current levels below 1.24. Prices have seen some bullish recovery along the way, but undeniably, the long-term trend for AUD/NZD is down. A large part of the decline can be attributed to declining Australia mining economy in 2012, and also substantial rate cut from RBA which saw the reference rates declining from 4.75% to current 3.00%. In comparison, NZD rate stayed constant at 2.50% after a fall from recent high of 3.00%

Daily Chart


After breaking 1.24 last week, price recovered slightly despite a hawkish RBNZ with Wheeler being upbeat about Kiwi’s 2013 outlook. The 2 day rally back towards 1.24, was unfortunately stopped short, pushing price back below 1.24 and confirming bearish breakout of 1.24.

Hourly Chart


Hourly Chart showed the importance of dovish RBA rate decision being the catalyst that sparked the bearish revival. Bulls were doing fairly ok, holding their own towards consolidation from 1.24-1.25, before RBA’s statement broke the stalemate to send price sharply lower. 1.235 provided some interim support but it was not enough to keep price back into the consolidation range between 1.23 to 1.235. Bulls may find some comfort that Stochastic is approaching Oversold, potentially forming a trough should price hit 1.23. However that may only provide some temporarily reprieve if both Central Banks continue to hold opposite views towards their willingness for further easing.

Wednesday’s Aussie Retail Sales and Thursday’s Aussie Employment could act as further catalyst to push price lower. Alternatively, bears may find opportunities to short if better than expected print push price temporarily higher.

More Links:
USD/CNY – Gains in service PMI from HSBC and Chinese Offical Figures
AUD / USD – Recovering Well from Support at 1.04


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