The AUD/NZD currency pair could be about to turn decisively higher. Last night’s Reserve Bank of Australia (RBA) policy statement was as neutral as it could get. More to the point, there were no hints of further interest rate cuts. In contrast, the RBNZ suggested at its last policy statement that more rate cuts could be on the way. This alone makes me think that the AUD/NZD may have bottomed out.
Thanks to increased uncertainty about the U.S. elections and a drop in the dollar, buck-denominated gold has been surging higher in recent days to reach north of $1,300 per ounce today. The stock market sell-off has further supported the perceived safe-haven precious metal.
The Australian dollar and the Japanese yen are the obvious choices when it comes down to trading during the Asian session tonight. Not only do we have rate decisions from central banks of both Australia and Japan, but we will also have the latest manufacturing PMI data from China, the world’s second largest economy and Australia’s largest trading partner.
The Australian dollar has been fairly stable recently, and it has actually risen against weaker rivals such as the New Zealand dollar and Japanese yen. However, that could all change if investors start to dislike risk, if, for example, U.S. elections or disappointing corporate earnings cause global equities to retreat.
The New Zealand dollar’s recent advance has come to a halt recently after the Reserve Bank of New Zealand suggested that interest rates may need to be cut further from their current record low of 2.0%. The NZD’s retreat has been particularly noticeable against the Australian dollar as the AUD/NZD pair has surged back above 1.0500 after dipping to as low as 1.0240.
he Euro/Aussie currency pair is in the process of creating a bearish engulfing candle on its daily chart, which is obviously a bearish pattern as it shows a clear shift from previously buying to now selling pressure.
The retails sales figures for the British pound and Bank of England rate decision may cause some action today on the EUR/GBP currency pair. The Aussie remains bearish for now, dropping into wave five of 5 that may hit 0.7400 today.