RBA rate decision pushes NZDAUD to 2008 highs

RBA rate decision pushes NZDAUD to 2008 highs

By Andrew May (Sales Trader, CMC Markets New Zealand)

Hot on the heels of the Reserve Bank of Australia’s (RBA) interest rate decision to keep rates on hold at 2.75%, the NZDAUD cross has relinquished its bearish pattern pushing through an historic four year resistance briefly touching 85 cents before retreating to open today at 0.8475.

Not since November 2008 has the NZD retained the scalp of an AUD 85 cent mantelpiece otherwise lost throughout Australia’s prolific mining boom and insatiably strong Aussie dollar appetite. With 85 cents breached in the overnight session, and again in late June, and with the current RBA economic easing rhetoric in full swing, expect to see NZD momentum carry further leap frogging to a 0.8526 support very soon.

The NZDUSD opens down today at 0.7750 from an earlier high of 0.7830. Of course risk sentiment had favoured a recovery for the NZDUSD over the beginning of the week, strongly encouraged through a raft of relatively buoyant manufacturing data and equity market gains. However the Greenback staged a comeback as factory orders and generally optimistic domestic data continue to point towards an earlier end of QE than anticipated. Adding further weight to the descent of the Kiwi was the RBA rate announcement in which the Aussie and Kiwi were dragged lower in tandem.

With US markets scheduled to be closed for 4 July celebrations, traders will be awaiting a spectacular return to Greenback strength if 165k+ jobs are added to the tally. However, some say this could be ‘a bridge too far’ for the US economy and its burgeoning unemployment. It’s difficult under past references to gauge the strength of the US economy firstly leading into private payroll and jobless claims data. Regardless of the outcome there will be an additional firework display and fanfare for the NZD as traders dissect dollar strength or weakness.

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