AUDNZD: Near term ceiling on Orr's comments
Orr's optimism bolsters NZD
The NZD ended firmer last week on Governor Orr's comments that the RBNZ can afford to do whatever it takes to support the New Zealand economy, but they can afford to wait and observe what is happening. Moreover, Orr stated that they will see what the situation is like in November and will cut if necessary. This now means that a rate cut in September is unlikely for the RBNZ. This put a near term ceiling in AUDNZD at the 1.0600 level which is currently being tested now. I have closed my AUDNZD longs for now from August 06 and 07 and seeking a fresh driver to take the AUDNZD higher. One data point I am particularly looking at is the business confidence data out later this week.
Confidence is everything for the RBNZ
One of the key indicators for the RBNZ has been business confidence data . The release is on Thursday August 29. A more negative reading here will weaken the NZD again and potentially create the shock for the RBNZ to lower interest rates in September and give another leg higher. This is certainly a good example of a potential 'fresh sentiment' move. A disappointing number would re-fuel the NZD bears.