AUDNZD in focus a head of the RBNZ rate meeting

RBNZ to remain on hold

The expectations are that the RBNZ will stay on hold. I covered that yesterday in a post, so see here for a refresher if you missed it.

So, with a hold the most likely outcome, the focus will shift on to the forward guidance from the RBNZ. The NZD has been losing value against the AUD over recent days and there is a belief that New Zealand will be hit harder than Australia if/when the coronavirus impact grows. The thinking is that New Zealand is more vulnerable to the virus as trade makes up about 60% of New Zealand's economy compared to around 40% of Australia's economy. Tourism in New Zealand amounts to just under 6% of the economy, while Australia's tourism is around 3%.

So, when the rate statement is released, the market focus will be on the forward guidance. If we get a dovish tilt remember the BNZ and the ANZ GDP reductions I mentioned yesterday:

However, the outlook for New Zealand is tempered somewhat by the coronavirus outbreak expected to weigh on GDP figures. Both ANZ and BNZ have cut their growth forecasts for New Zealand's GDP projections

AUDNZD is moving back into the 100 and 200 EMA's on the daily chart with the 1.0530-50 level looking like the first area of overhead resistance, once the 100EMA is cleared. Also note the R2 resistance level just below the 200EMA.

If there is a dovish shift in the RBNZ forward guidance then looking for buyers on pullbacks on the pair may be a savy trade. Certainly one to watch.