AUDNZD recently sold off after Australia printed weaker than expected retail sales data. Consumer spending picked up by 0.3% in May, lower than the projected 0.5% increase, while April figure was downgraded from a flat reading to a 0.1% decline.
The pair dropped below the 1.1300 psychological level after the numbers were printed and continues to be weighed down by the dismal performance in Chinese equity markets today. However, price seems to be drawing support from the Fibonacci retracement levels which line up with a former resistance area.
Stochastic is indicating oversold conditions, which means that the selloff is overdone and that buyers could take control. Similarly, RSI is starting to move up from the oversold region and indicating that bullish momentum could return. Meanwhile, the 100 SMA is treading above the long-term 200 SMA, confirming that the uptrend could stay intact.
AUDNZD Fundamental Factors
The Kiwi is fundamentally weaker compared to the Australian dollar, as New Zealand has printed more disappointing reports compared to Australia. In the recent dairy auction, the industry logged in another sharp decline in prices, which could have negative implications for the country’s exports and production.
The RBNZ has previously specified that they are open to cutting interest rates again if the economy shows more signs of weakness. The RBA is also staying accommodative but is more concerned about preventing a property price bubble.
In China, the stock market chalked up another round of sharp declines in today’s trading, suggesting that the central bank’s recent rate cuts haven’t had much of an effect. This could set the stage for another round of easing measures from the PBOC, which might wind up supporting demand for Australia’s raw material exports.
A climb for AUDNZD could take the pair back to its previous highs at 1.1400 or even higher. On the other hand, a break below the Fib levels would indicate further declines, possibly until the next support at 1.1150.
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