AUD/NZD Shows a Tendency to Approach 1.01

The exchange rate of AUD against NZD fell 5% after reaching the highest point in last November. And whether the tendency this week is strengthened or not, which draws close attentions from investors.

Although the inflation and unemployment rate is well improved, it is estimated that the Reserve Bank of Australia will at least cut interest rates once, and even twice according to the prediction from some banks. By comparison, it is surprising that the Reserve Bank of New Zealand has kept interest rate on hold since last November, which weakens the prediction that RBNZ will ease monetary policy further. The latest market expectation suggests that there is a possibility of 62% that RBZN may cut interest rate this year.

Per price trend, monetary policy has a significant impact on AUD/NZD. The possibility of RBNZ‘s further interest rates cut in February is reduced expectedly. If New Zealand Treasury worries about the novel coronavirus’ pressure on the economy in New Zealand, the possibility of rate cut will be increased. And the views can be proved by some new trends this week. RBAs Chairman Philip Lowe gave a speech at Sydney on Wednesday, and will make the half-year statement to Congress on Friday.

AUD/NZD recently hovers above the support level of 1.0238, the lowest point since September 14, 2016. And any breakthrough in this level will help increase the tendency above.

We expect the RBA will reduce the cash rate to 0.5% in April, while RBNZ will stabilize the rate at 1.0% in the first half of 2020, and AUD/NZD is expected to be close to 1.01 by June.

AUD/NZD Daily Pivot Point: 1.0355

S1: 1.0340 R1: 1.0370

S2: 1.0325 R2: 1.0385