The AUD/NZD pair rebounded to a high of 1.0840 after initially dropping to 1.0815, showcasing a strong comeback. This surge can be attributed to strong data from Australia, including hot inflation figures reported earlier in the week which had a positive impact on the Australian dollar. Additionally, New Zealand’s newly announced tax cuts for low and middle income households have caused a delay in the Reserve Bank of New Zealand’s (RBNZ) rate cuts, leading to a more favorable outlook for the Kiwi.
Australia’s Q1 business investment and higher private capital expenditure figures have provided support for the AUD, along with the unexpected inflation figures reported earlier in the week. This positive economic data may prompt the Reserve Bank of Australia (RBA) to adopt a more hawkish stance. On the other hand, the RBNZ’s rate cut expectations have been softened by New Zealand’s fiscal policy changes, potentially limiting losses for the Kiwi. The odds of a rate cut in November have decreased slightly but remain around 70%.
In terms of technical analysis, the AUD/NZD pair remains in a firm downtrend according to the daily chart, with the Relative Strength Index (RSI) in negative territory. The Moving Average Convergence Divergence (MACD) histogram also supports the downward momentum. However, the pair has shown signs of a slight upward correction as it approached oversold territory on Wednesday, indicating that sellers may be taking a breather. This adjustment aligns with the recent market developments and signals a possible shift in momentum.
Overall, the AUD/NZD pair is currently benefitting from strong economic data from Australia and a more lenient fiscal policy in New Zealand. This has caused a rebound in the pair’s value after an initial dip, with potential implications for both the Australian dollar and the New Zealand dollar. Traders will continue to monitor key economic indicators and central bank actions to gauge the future direction of the AUD/NZD pair in the forex market.
