AUD/NZD: Aussie recovering, but downside pressure still high
- Both currencies are lagging the major bloc, but the Aussie is still edging out the Kiwi as the bigger loser.
- AUD Trade Balance at 00:30 GMT could make for an Aussie run if the numbers beat.
The AUD/NZD pair dropped hard at the start of Wednesday's session, but recovered steadily throughout the day and is currently testing above 1.0740 heading into the Thursday market window.
The Aussie and the Kiwi both continue to struggle in the broader markets as Australia and New Zealand suffer from middling economic data, and muted growth prospects as both economies lag behind global growth trends.
Market action has been fairly one-sided between the two currencies, and the AUD/NZD pair has been drifting lower since late October of 2017. While both countries wait for signs of improving inflation, New Zealand has managed to edge out Australia, albeit only slightly with a sunnier outlook on growth prospects into the future. Both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) are widely expected to hold off on rate increases well into 2019, with some particularly dour notes not expecting a rate change from the RBNZ until sometime in 2020.
The macro calendar is sparsely populated for the AUD/NZD this week, with low-tier Manufacturing Sales figures for the Kiwi printing at 1.0% versus the previous period's 0.3%, and Thursday has Australia seeing the Trade Balance numbers at 00:30 GMT. The market forecasts are calling for the trade balance to swing to an A$300M surplus after the previous reading showed a deficit of almost A$1.6B. A positive swing to the trade balance would give the AUD some much-needed breathing room.
AUD/NZD Technicals
The pair is still trading low against the 200-day SMA, but a soft double-bottom may be forming on the Daily candles, while the H4 charts show the pair trying to make lower highs into the major support from 1.0665. Intraday support is sitting at 1.0705 and major support at 1.0665, with resistance at 1.0765 and 1.0825.