Yesterday the AUD/NZD pushed through the 1.11 support level; this found the AUD exchange rate almost 0.5% weaker against the Kiwi Dollar.
The reason behind the movement was mainly due to strong Business conditions out of New Zealand. The Business NZ Manufacturing Index is a survey of manufacturers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries and inventories. This figure came in stronger than the previous again, for the fourth month in a row. The figure came in at 59.3 versus the previous 58.5, indicating further expansion in the manufacturing sector.
Over on the Australian shores, Assistant Governor of the Reserve Bank of Australia Christopher Kent said the Reserve Bank hasn’t ruled out intervention. Kent further speculated again on the AUD, saying “a further depreciation of the Australian dollar, which remains above most estimates of its fundamental value, particularly given the substantial declines in commodity prices”. What we got from his speech yesterday is that the RBA may, and is not afraid use monetary policy to assist current exchange levels. However, Investors seem to be reacting less and less to these types of statements; as it seems to be old news and not taken too seriously.
The AUD found little support from the Chinese as their Industrial Production figures came in below the expected of 8% to 7.7%. This gave the AUD a little slump yesterday against the USD, EUR and GBP.
Heading into the weekend, we have the G20 meeting which could make the rates volatile come Monday morning, depending on what announcements are released. However, due to the size of the event it will be difficult to predict whether the AUD will come out stronger against the NZD. The more recent trend of NZD/AUD strength may prevail Monday morning.