Technical Bias: Neutral
- AUDNZD reversal continues as the pair falls further below 1.0150 support level.
- New Zealand CPI weaker than forecast in Q1: -0.3% (QoQ); 0.1% YoY.
The AUDNZD continued to retreat from the 1.02 level in Monday’s Sydney session amid weaker than forecast New Zealand inflation data.
The AUDNZD trimmed its losses after falling to 1.0121. It would subsequently consolidate at 1.0138, declining 0.2 percent. The AUDNZD is supported at 1.0096 after falling below the 1.0150 support level on Friday. On the upside, the next resistance level lies at 1.0172. The pair established a high of 1.0221 last Thursday before retreating. The AUDNZD is expected to test parity as the year progresses, reflecting prevailing weakness in the Australian dollar.
The AUDNZD could face significant price action on Tuesday after the Reserve Bank of Australia releases the minutes of its April 7 policy meetings. The RBA has maintained its rate target at 2.25 percent since February.
In economic data, New Zealand inflation weakened more than forecast in the first quarter, reflecting broad deflationary pressures throughout the advanced industrialized world. The quarterly CPI rate dropped 0.3 percent following a 0.2 percent drop in the fourth quarter of last year. The median estimate of economists called for a 0.2 percent drop.
The CPI rate increased 0.1 percent annually in Q1, well below the 0.8 percent rate in Q4, Statistics New Zealand reported on Monday.