AUD/NZD

AUD / NZD: Sell off below 1.0500 after the SoMP But Stay Sideways Around the Daily Pivot

The RBA has been in the spotlight for much of the week, when the central bank kept interest rates, 1.5%, maintained a similar language, progress 'gradually' on track, but then surprised mid-week markets on Governor Lowe's assessment of economic valuations as opposed to the RBA statement, proposing a neutral stance, now sees the market forecast an 80% chance of a rate cut this year.


Here's RBA's dovish attitude:

The probability of a rate increase or cut is more balanced than before.

The board does not see a strong case for moving interest rates in the near future.

The board assesses the progress of inflation, unemployment can.

maybe lowering the rate if there is a sustained rise in unemployment, inflation is too low.

Cut GDP forecasts, see 2.8 percent y / y Dec 2018, 3.0 percent Dec 2019, 2.7 percent December 2020, 2.7 percent June 2021.

Lowering the inflation forecast, the average cut at 2.0 percent y / y December 2019, 2.1 percent December 2020, 2.2 percent June 2021.

We are now looking forward to the RBNZ's first policy decision since November 8 which will also be closely monitored. "AUD / NZD is very volatile this week and will remain so, with talk of lower interest rates on both sides," analysts at Westpac noted.

AUD / NZD level
Prices have been hit several times this year. The low at 1.0398 has recently been observed in the radar bear, but first of all, the 21-day SMA must be defeated, keeping the movement to the 1.0450 support area. The breakthrough there will open the prospect for a sustainable trend to the downside, in an extension of last year's summer supply. However, if the RBNZ is equally neutral, the pair is likely to remain in the sideways channel with the target rising 1.0550 above 1.0670 highs running.