AUD/NZD Bears Likely to Take Control As the Reserve Bank of New Zealand Hiked Interest Rates

Australia – CB Leading Index

On Tuesday, at GMT 3:30 p.m., the Conference Board Inc released the month-over-month leading index for Australia. It measures the changes in the level of a composite index based on seven other major fundamental indicators.

The CB leading index aggregates some of the other indicator data. So, binary options traders consider this to be an important representation of the overall Australian economy. However, since most of these data are previously released, the CB leading index tends to have a minimized immediate market impact.

Last month, the CB leading index came out at 0.3%. This month, it fell considerably and came out at 0.1%.

New Zealand – Official Cash Rate

On Wednesday, at GMT 1:00 a.m., the Reserve Bank of New Zealand released the Official Cash Rate. It is the interest rate that banks in New Zealand use to lend funds held at the central bank.

Forex traders consider the official cash rate to be the most important factor in the valuation of the New Zealand Dollar against other currencies. In fact, most of the other fundamental indicators are considered just to predict future interest rates. 

Last month, the RBNZ left the official cash rate at 0.50%. This month, the RBNZ decided to hike the official cash rate to 0.75%.

AUD/NZD Forecast

Since the end of March 2021, the AUD/NZD remained a strong downtrend. Over the past two quarters, the AUD/NZD fell by around 6% or 670 pips. Last week, it retested the support near the 1.0300 level and formed a triangle pattern on the daily chart. Currently, it is trading within the narrow range of this triangle just below the resistance near the 1.0470 level.

The Australian CB Leading Index grew at a slower pace of 0.1% over the last month. On the other hand, the Reserve Bank of New Zealand decided to hike the overnight cash rate from 0.5% to 0.75%. We believe it would set a bearish fundamental outlook for the AUD/NZD this week. Therefore, if the AUD/NZD continues to trade below the resistance near 1.0470, it would likely attract additional bearish momentum in the market.

Hence, binary options traders should look out for trading opportunities below this major resistance level around 1.0470.

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Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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