Antipodean currencies – Australian dollar and New Zealand dollar – can be found among top performing major currencies today. However, NZD is outperforming AUD by a big margin. There isn’t one, clear reason behind today’s outperformance of the New Zealand currency but a mix of second-tier news could be contributing. Daily coronavirus case count is lowering, which has led country’s authorities to ease restrictions on regions that did not experience major outbreaks. Lockdown in Auckland, source of recent outbreak, has been extended by two weeks. Moreover, some media reported last night that the United Kingdom and New Zealand are about to finalize their trade agreement. Both of these factors may have contributed to today’s gains on NZD market but the more likely explanation is that we are observing a delay reaction to Friday’s speech from Powell that reassured markets that cheap money and loose policy is here to stay for a while longer.
Taking a look at AUDNZD chart, we can see that the pair continues to move lower following a break below the neckline of head and shoulders pattern (red line). After a brief struggle near the lower limit of the downward channel, the pair has managed to clear this hurdle as well and broke below the 1.0420 support. AUDNZD is currently trading at the lowest levels in 17 months. Textbook range of the break from the aforementioned head and shoulders pattern points to a drop towards 1.0242.