AUD/NZD: Break below 1.05 to clear the way towards 1.0450 – Credit Suisse

Until the Delta variant touches down in New Zealand, strategists at Credit Suisse believe NZ’s status as “the last one standing” could help NZD against AUD. The narrowing monetary policy divergence leaves limited downside potential for AUD/NZD, therefore, a break below 1.0500 could pave the way for a move towards 1.0450.

Narrowing monetary policy divergence leaves limited downside potential for AUD/NZD

“Even with the hawkish RBA surprise, the RBNZ’s hawkish rhetoric suggests the monetary policy divergence play is alive and well. Until the Delta variant touches down in New Zealand, we are inclined to believe the country’s exceptional status as ‘the last one standing’ will help NZD against AUD.”

“The narrowing monetary policy divergence, however, leaves limited downside potential in AUD/NZD: we think a break below 1.0500 could pave the way for a move towards 1.0450 levels last seen in Dec 2020. Any COVID-19 breakouts in New Zealand would lead us to quickly reassess these levels.”