AUD/NZD: breaking out to the upside after RBNZ jawboned the bird

Currently, AUD/NZD is trading at 1.0515, up 0.71% on the day, having posted a daily high at 1.0522 and low at 1.0429.

AUD/NZD had been contained between 1.0400 and 1.0500 ahead of the RBNZ today that has turned out to be a major risk event for the market considering its take on the value of the bird and after they lowered their estimates for inflation and 2% will not be reached until Q2 2018 vrs previous Q4 2018. The cross has shot through the 1.05 handle and is making a case through there with advances to test the recent high of 1.0528 and scored 1.0532.

AUD/NZD 1-3 month: 

Analysts at Westpac are expecting the Aussie to move higher against the bird to the 1.0650-1.0770 area, mainly for valuation reasons. "The cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment. (11 Jan)".

"NZ swap yields 1-3 month: The RBNZ ended its easing cycle on 10 Nov and will remain on hold for a long time. That will anchor the short end somewhat (although the 2yr-OCR spread – one measure of stretchedness – could rise further given historical precedents) with the long end free to follow offshore yields. The curve steepening trend should continue. (14 Nov)"