Two central banks, two different approaches
There is a central bank divergence between the RBA and the RBNZ which makes the AUD/NZD a great chart at the moment.
The RBA
The RBA met on August 06 this week and they left the cash rate unchanged. The general tone of Philip Lowe's statement was neutral with the RBA acknowledging that although they expected an 'extended period of low interest rates' they did not hit the panic button and cut rates. See full statement here. They were chilled like a koala - problems? What problems? Last night Governor Lowe was a little more bearish, but the overall tone was that he was not in a panic mode and that he would explore other options alongside monetary policy to address the economy which had reached a 'gentle turning point'.
The RBNZ
Adam summed it up well with his post here. The RBNZ's action was the sound of pure panic. The RBNZ cut rates by 50bps and then in the presser Governor Orr spoke about the potential for negative interest rates (though he did day we are not there yet) and the use of unconventional policy. It was a bold move and then the Bank of India and Thailand followed suit soon after. Justin pointed out that this is a sort of currency war now in play as Central Banks race to the bottom.
AUDNZD
The AUDNZD chart on the weekly is putting in a strong bullish reversal bar from a double bottom if it closes that way this week. The overhead targets are at the Monthly Pivot at 1.07000 and then at R1 at 1.0966. Stops will be on a break of 1.0464 to the downside.
