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Range trading continues for the NZD/AUD (AUD/NZD)

Written by Sam Coxhead on September 1st, 2011.      0 comments

11:30 AM (NZT)  The trading of the NZD/AUD pair has been well contained within the recent range so far this week, so this update makes for reasonably brief reading. The interbank range has been .7921/.8005 and the current interbank price is .7973.
There has been little so far in the way of economic data that has moved the market for either the NZD or AUD from the domestic point of view. Both economies have had monthly building consent statistics released. Australia was 1.0% vs 2.1% expected ,and in NZ the number was +13% vs -1.0% previously. In NZ the consent approvals are expected to climb substantially as the rebuilding gains momentum following the devastating earthquakes.
The NBNZ Business Confidence survey was released yesterday and shows that the bounce back in NZ business confidence since the February earthquakes remains in place, if slightly down from the previous release. Today we see the release of the Australian data of private sector credit and retail sales and these will give us a better idea of how things are travelling in the domestic economy.
In the international arena, there has been a bounce back in risk appetite from investors. This is partially attributable to two different factors. Firstly, the speech from US Fed Chairman Bernanke last weekend, and the release of the minutes from the last FOMC monetary policy meeting both point towards the proposition of a further quantitative easing program should the economic data require it. This coupled with the fact that the recent economic releases in the US have actually been more robust than expected, means that growth assets have bloomed throughout the week so far.
The AUD and NZD have both had their moments in the sun leading the currencies higher and this has kept the cross rate between the two within the expected and recent ranges. As long as the interbank market resistance .8000 can hold for the most part, expect the range to continue in the short term.
Next week is a big week for Australian economic data, with the Reserve bank of Australia cash rate announcement,2nd quarter GDP numbers, and employment numbers dues for release. These announcements will no doubt be keenly watched and add more colour to the economic picture in Australia.