Summary:

  • AUD plummets after RBA’s Debelle speech
  • NZD outperforms its peers after comments from finance minister
  • AUDNZD tumbles toward a relevant support

The Antipodean currencies are among top movers in G10 after speeches of RBA’s Debelle as well as NZ’s finance minister Steven Joyce. Let’s begin with the former.

RBA’s Debelle decided to refer to the latest minutes revealed on Tuesday where a discussion about a neutral nominal rate at 3.5% took place. In effect, the AUD soared on expectations that 200bps of rate hikes are likely this monetary tightening cycle. As for his today’s speech we present the most important headlines:

  • higher AUD works against benefits of faster global growth
  • AUD rates don’t have to rise in line with global peers
  • no significance in board discussion of a neutral rate
  • neutral rate is likely to remain lower than in the past
  • lower global rates put upward pressure on AUD

Remarks pertaining to a lack of importance of a discussion about a neutral rate being at 3.5% along with rising AUD acting not in favor of the economy seemed to have the most impact on AUD which is the worst performing currency. Let us recall that we called into question yesterday whether the RBA still needs a rate hike give a massive surge in the exchange-rate.

link do file download linkAUD is being sold-off while NZD is retaining its upward momentum amid tepid performance of remaining currencies in G10. Source: Bloomberg

On the other hand, the NZD got a boost from New Zealand’s finance minister Joyce who expressed no concerns about the exchange-rate. According to him, national firms are coping well with NZD at current levels as it reflects the strong economy. At the end he added that a new RBNZ;s governor could be named soon after September general election.

Those commentaries have reinforced the NZD making it the best currency in the G10 basket. As a result, the AUDNZD is tumbling and approaching a crucial support level placed at a 38.2% retracement. Once buyers are able to stay above it, it could foretell a rebound going forward. Let us remind that the net positioning offers more space to gains for AUD rather than NZD which could matter in the nearest future.

link do file download linkThe AUDNZD is plummeting following remarks provided by RBA’s Debelle as well as NZ’s finance minister. The pair could rebound, should bulls are able to stay above a 38.2% retracement. Source: xStation5