AUD/NZD Support May Be Threatened by Strong GDP Print: Analysis
(Bloomberg) -- AUD/NZD may test 1.0359 technical support for a fourth time if New Zealand’s 3Q GDP surpasses the topside of consensus, Bloomberg strategist Michael Wilson writes.
- Support at Sept. 22 low of 1.0359 has been attempted on three occasions
- A close below that level allows for a deeper correction to twin lows of 1.0238/39 reached in September
- Such a move would also be seen as continuation of the broad-based bear trend that started from March 23 high of 1.1334
- 3Q economic growth is forecast at 0.8% q/q vs prev. 0.9%, according to median est. of 14 economists in Bloomberg survey; estimates ranged from 0.7% to 1%
- If growth comes in at the top end of the forecast range at 1% q/q, it would mark NZ’s fifth consecutive quarterly expansion at this pace which will lift the annual GDP to 3.8%
- The heady momentum would come at a time when AUD has shown greater sensitivity compared with the kiwi from narrowing rate differentials against the greenback since U.S. election
- Further rate divergence should place further pressure on the cross
- NOTE: Prices at Tuesday’s GDT auction may show whole-milk powder prices holding at over 2-year highs, confirming market confidence
- This is just as the Australian government yesterday issued bearish outlooks on iron ore and coking coal in its mid-year budget and economic forecasts
- AUD/NZD currently up 0.1% to 1.0468
- NOTE: Michael Wilson is an FX strategist who writes for First Word. The observations he makes are his own.
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
To de-activate this alert, click
hereUUID: 7947283