AUDNZD – Daily Chart
The price of AUDNZD has remained elevated after a recent test of the 1.11 level. The latest data could decide on a correction or another push higher.
New Zealand CPI data will be released at 5:45am HKT with a 2.1% reading expected. That would be down from 2.2% and lower inflation could hurt the currency.
At 8am HKT, a Westpac leading index report comes for Australia. The Aussie economy has remained resilient in jobs, but critics say many are from the public sector.
The Reserve Bank is expected to cut interest rates in the coming year as inflation has returned to target levels.
The RBA has been able to keep rates at 4.35%, compared to 4.25% in New Zealand. But the New Zealand dollar has been sold recently on a worsening economy. Price action in the year ahead will hinge largely on the central banks as traders look to see who moves first and by how much.
Economists are predicting annual inflation will be in line with the Reserve Bank of New Zealand’s forecasts in the December quarter. That could see a 50 basis point rate cut in February. In Australia, Commonwealth Bank’s Gareth Aird said recent labour market data and a drop in wages supports the view that rates can be cut.
“Australia should be able to run an unemployment rate of about four percent and see inflation within the target band sustainably,” he said.