- AUD/NZD takes offers to refresh intraday low as RBA flashes downbeat signals.
- RBA announces 25 bps rate hikes, as expected, but talks surrounding inflation lures Aussie bears.
- US-China news, cautious optimism ahead of the top-tier data/events also weigh on the exotic pair.
AUD/NZD bears run on full-steam as the pair drops around 40 pips to 1.0820, marking the biggest daily slump in a week, following the Reserve Bank of Australia’s (RBA) monetary policy announcements during early Tuesday. Also weighing on the cross-currency pair could be the risk-negative headlines concerning China, a major customer of Australia and New Zealand both.
RBA matches market forecasts of lifting the benchmark interest rate by 25 basis points (bps) to 3.60%. However, the RBA Statement saying, “The Consumer Price Index (CPI) indicator hints at the inflation peak” seemed to have caused panic among the pair sellers.
Also read: Breaking: RBA hikes OCR by 25 bps to 3.60% in March, as expected
It should be noted that Aussie trade numbers and comments from Australian Prime Minister Anthony Albanese seemed to have favored the pair buyers earlier in the day. That said, the Pacific major’s January month Trade Balance came in softer but the details surrounding the Exports and Imports were upbeat. That said, Australia PM Albanese said earlier in the day, “I believe Australia can avoid a recession.” The policymaker also said that the relationship with China has improved.
On a different page, fears of fresh US-China tussles weigh on the sentiment but the cautious mood ahead of Fed Chairman Jerome Powell’s Testimony seems to restrict the momentum, which in turn exerts downside pressure on the AUD/NZD price. The likely meeting between the officials from the US and Taiwan, as well as amid Beijing’s criticism of Washington’s cold war strategies, seem to challenge the pair of late due to its risk-barometer status. On the same line could be the Financial Times (FT) headlines suggesting the start of a new era of caution due to China’s modest economic growth forecast.
Also read: China’s Qin: We resolutely oppose all forms of hegemony, cold war mentality
Looking ahead, risk catalysts may entertain AUD/NZD traders but Wednesday’s speech of RBA Governor Philip Lowe will be crucial for clear directions.
A downside break of the 100-DMA, around 1.0850 isn’t an open invitation to the AUD/NZD bears as a convergence of the previous resistance line from February 21 and a six-week-old ascending support line, around 1.0810, appears a tough nut to crack for the bears.
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