From the FXWW Chatroom – The AUDNZD has continued to sneak higher for the in line with rising 2yr swap spreads, which in my view is a key driver for direction. the IR spread failed to break through the 10bp differential at the close of May AND both the cross rate and the swap swaps retraced aggressively to Sub 0.00 and 1.0650 respectively. However there has been a reversal on trend since those lows and the repeated rhetoric from RBNZ Gov. Ore signalling that cuts are not off the table has given the AUDNZD a new legs.
Purely on a technical basis the AUDNZD will have some resistance at 1.1000. However the swap spread, which is now at 2y high, sees next IR differential resistance being 20bps (0.200), This was last seen back in April 2016 when the AUDNZD cross was 1.1250.
Trade WM at own risk.
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