CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

AUD vs NZD Who is Winning

August 16, 2019 1:57 PM

AUD vs NZD: Who is Winning?

The Australian Dollar and the New Zealand Dollar are two commodity currencies that are heavily dependent on China as a trading partner.  As the slowdown in China continues, it directly effects the economies of Australia and New Zealand.  With no end in sight to the trade war between the US and China, fears spread throughout the region (and the world), which continue to put pressure on the manufacturing industry in both countries. Given that both these economies are so reliant on China, which is the better currency to own at this point?

Both AUD/USD and NZD/USD are trading at or near multi-year low:

Source:  Tradingview, City Index

Source: Tradingview, City Index

With the larger than expected rate cut last week by the Royal Bank of New Zealand (-50bps vs -25bps expected), along with RBNZ’s Orr noting “nothing is ruled out for the future”, the NZD/USD traded to new multiyear lows.  However, at the same time, this sparked fears that the Reserve Bank of Australia may need to “play catch-up”, and lower rates as well.  This pushed AUD/USD to new yearly lows.  And although Australia’s employment data came out stronger on Thursday (41.1K vs 14.0K expected), it was not enough to push the currency pair higher.

AUD/NZD

Looking at AUD/NZD Daily Chart, price recently had a false breakdown out of a longer term triangle and is currently near 1.0547. This level is not only trendline resistance, but also the 61.8% retracement from the May 7th high to the August 6th low. 

Source: Tradingview, City Index

On a 240 minute chart, price is currently in an ascending wedge and diverging with RSI.  If price we to break lower from the ascending wedge, the target would be the full retracement of the wedge, which is 1.0454, roughly 100 pips lower from currently levels.  There is also horizontal support which comes in near the target level.

Source: Tradingview, City Index

It appears that AUD is leading the way over NZD at the moment.  However, those who think the AUD may be a bit overdone on the upside, may look to short AUD/NZD at current levels with a stop above the descending trendline on a daily. 


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024