The quiet FX battle in the South Pacific continues. Or how small divergences lead to big FX moves

The New Zealand dollar was the top performer last week, the Australian dollar lagged

In general, the Australian and New Zealand dollars move together. The global economic factors that drive and underpin the neighbouring countries are mostly the same.

But there are differences and those are increasingly in focus. This week, for the third time in the past three months the pair find themselves on opposite sides of the FX spectrum.

This week, the New Zealand dollar led the way while AUD lagged. That sent AUD/NZD down below the June lows and to the worst levels since February.

AUD/NZD weekly:

The chart highlights some nearby support levels including the uptrend since April 2015 and the Feb lows.

In the week ahead, the calendars in New Zealand and Australia are light. The only likely market mover is the NZ trade balance report. That could help offer the pair a reprieve but the bigger signal from the divergences in the pair is how uncertain the outlook is and how small divergences can lead to big FX moves.