Forex » RBA position weighs on AUD/NZD pair

The RBA’s position weighs on the pair AUD/NZD

With the RBA only raising its rate by 25 basis points in each of the last two meetings, the RBNZ is the more hawkish of the two central banks.

Since the RBNZ met on October 5, it has unveiled its 50 point tax base to raise the official cash tax to 3.5%. The decision was made for an increase of 75 basis points, but in the end it was decided that an increase of 50 basis points. Later, New Zealand released CPIs for three quarters at 7.2% YoY, down slightly from the previous quarter’s 7.3% YoY. However, be sure to pay a hit at 6.6% YoY. They should be published in a few hours for the third quarter, and the employment data should be +0.5% QoQ against 0% QoQ last. The RBNZ It will meet again on November 23 and early indications are that the central bank will increase the amount by another 50 basis points to reduce the OCR to 4%.

The RBA met earlier in the day and raised its rate by 25 basis points, as expected, to take the cash rate to 2.85%. In addition, he unveiled his inflation forecast at a peak of 8% this year, against a previous forecast of 7.75%. Board members see inflation falling to around 4% in 2023 and a little above 3% in 2024. Rate increases will be determined for incoming data. Q3 inflation data released last week showed a rise to 7.3% yoy from a Q2 reading of 6.1% yoy. An increase of 7.0% was expected.

Due to the RBNZ’s more hawkish stance than the RBA, the AUD/NZD pair fell in the forex. The pair bottomed at 1.0280 on September 16, 2021 and had bid, eventually forming a rising wedge. The price of the AUD/NZD pair posted a false break above the wedge and reached the high of 1.1490 on September 28, 2022. Since then, the AUD/NZD pair has been declining, pulling back from the top of the rising wedge and continuing higher. the bottom. trend line. The pair is trading aggressively lower at the past 5-day pace (and buying today) and broke through the 38.2% Fibonacci retracement level from the September 2021 lows to the September 2022 highs at 1 1028 and the average 200-day moving at 1.1003. It hit an intraday low today so far at 1.0924.

AUD/NZD Daily Chart

Source: TradingView, StoneX

On the 4-hour chart, the price of the AUD/NZD pair moved lower in a descending channel. A support confluence sits just below today’s low on the lower trendline of the channel, a long-term trendline (green) from October 2013 and the 50% retracement of the lows September 2021 Aux plus September 2022 highs between 1.0885 and 1.0915. Below this, the price may fall to the horizontal support (April 25th low) at 1.0825, after the 61.8% Fibonacci retracement level due to the previous period mentioned at 1.0742. However, note that the RSI is in oversold territory, indicating that the pair could be ready for a rebound. First resistance is seen at the 200-day moving average and the October 28th lows between 1.1003 and 1.1014, following the trendline above the shorter-term channel near 1.1105. Above there, rising wedge lower trendline resistance (on the daily chart) near 1.1144.

AUD/NZD 4 hour chart

Forex » RBA position weighs on AUD/NZD pair
Source: TradingView, StoneX

With the RBA only raising its rate by 25 basis points in each of the last two meetings, the RBNZ is the more hawkish of the two central banks. The RBNZ rose 50 basis points at its last meeting and is expected to rise another 50 basis points at its November meeting. Will the AUD/NZD pair continue to trade on the forex? So far it has fallen by 38.2% from September 2021 to September 2022. A bounce could be ahead as the RSI is oversold and there is already a confluence of support just below it. However, as long as the RBNZ remains hawkish, the AUD/NZD pair may continue lower.

By Joe Perry, CMT, » Official Site

Forex » The week ahead from November 27 to December 2, 2022

Disclaimer: The information and opinions contained in the report are provided for general information only and do not constitute an offer or a solicitation concerning the sale or sale of foreign exchange contracts or CFDs. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy and is not exhaustive, and assumes no liability for direct, indirect or consequential damages resulting from than anyone he trusts such information.

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