The AUD/NZD pair broke higher during the course of the session on Wednesday, testing the 1.13 level. This area has been resistance several times, and if we can break above the 1.13 level, I feel that this market should go much higher. After all, the Australian dollar is relatively stronger than the New Zealand dollar, mainly because of actions out of the Royal Bank of New Zealand recently.
That being the case, we also have to think about what the RBNZ has done. They have recently admitted to entering the spot Forex market and selling the New Zealand dollar, to drive down the value of the currency. The believe that the market needs to head down to the 0.68 level against the U. S. dollar in order to reach “fair value”, and as a result the market will more than likely continue to sell the New Zealand dollar overall as there is most certainly going to be bearish pressure upon it.
Interest-rate decision
The Royal Bank of New Zealand has an interest rate announcement today, and the accompanying statement of course will be followed with great interest. I have no doubt that the central bank will trying to talk down the value the Kiwi, and as a result I think that this market will continue to go higher as although the Australian dollar is a bit soft overall, it’s not the New Zealand dollar and that’s all that’s important in this particular pair.
On a daily close above the 1.13 level, I believe that the market should then head to the 1.15 handle as it is the next large, round, psychologically significant number. The market will more than likely be attracted to that number basically because of that, but I believe that we could go even higher than that, especially if the Royal Bank of New Zealand gets its wish. The wish of course is the NZD/USD pair falling all the way down to the 0.68 handle, which would obviously have a “knock on effect” against the NZD around the Forex markets, this pair included.
