Good afternoon trading floor,
So this afternoon we are taking a look at the AUDNZD. The RBA has previously committed to keeping interest rates above the negative territory. Therefore if we hear more of the same, there is a possibility of a strong AUD coming out of the announcement.
A cut to the cash rate this afternoon seems unlikely – a Bloomberg poll revealed 20 of 24 analysts forecasted no change to the rate. Economists widely predicted the RBA will hold fire today to give precedent to the Federal Budget, set to be delivered at 7.30pm tonight. When you take a look at the RBNZ the central bank has taken a more dovish tone suggesting negative rates could be an option in 2021, therefore we are setting up for an interest rate divergence between the two economies.
Taking a look at the current positive sentiment, the AUD may also remain in high demand following the rally in equities and commodities this morning. The AUD will likely be impacted by any volatility on the global stock market, which may pose a risk to the position.
AUDNZD – Technical Analysis
The AUDNZD is still trading inside a long term rising channel. The market is now teasing a breakout of the descending channel formation, which is also a corrective structure. We are looking to position long on the pair expecting a break above the channel and neck line.
Trade Setup: BUY Market execution, current price 1.0814, stop loss 1.0744 and take profit left to run, but targeting the 1.0930 handle initially.
Stop loss: 70 pips
Take profit: 116+ pips