Australia and New Zealand are so
close to one another, which makes them close trading partners. The countries
belong to the ASEAN-Australia-New Zealand Free Trade Agreement. The other
members of this block are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia,
Myanmar, the Philippines, Singapore, Thailand and Vietnam.
According to the Australian Trade
and Investment Commission, Australia exported goods worth more than A$13
billion to New Zealand. It imported goods worth more than A$11.8 billion. This
makes New Zealand the seventh most important trading partner for Australia. The
biggest ones are China, United States, Japan, South Korea, India, and Hong
Kong. For New Zealand, Australia is the second most important trading partner
after China.
The AUD/NZD cross is therefore an
important one for the Australia and New Zealand trade. In the past few weeks,
the pair has soared after a couple of positive data from Australia. This week,
the country released employment numbers that beat the consensus estimates. In
addition, China released positive economic numbers, which showed that the
global economy is doing well. These numbers overshadowed the RBA’s minutes that
said the bank would consider cutting rates if the economy continues to weaken.
Meanwhile, in New Zealand, the inflation numbers released yesterday were below
expectations. The headline CPI for the first quarter rose by 1.5%, which was
lower than the expected 1.7%. On a quarterly basis, the headline CPI number
rose by 0.1%, which was lower than the expected 0.3%.
Therefore, the AUD/NZD pair rose
sharply to a YTD high of 1.073. On the chart below, this price was above the
21-day and 42-day moving average. I prefer the two averages because they
represent the 3-week and 6-week averages of a pair. The RSI has moved to almost
the 70 level. In the near term, the pair could continue moving higher, to test
the important resistance level of 1.100.
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