The Aussie depreciates initially against its counterpart and slips below the 1.0790 mark in the Asian session. The cross felt the heat around 1.0820 and took no time to take a sharp U-turn, and traveled back to the lows of 1.07736.
At the time of writing, AUD/NZD is trading at 1.0785, up 0.04% on the day.
The narrow gap in growth differentials between Australia and New Zealand continues to confide the cross in a broader trading range. Moving onto the latest Financial Stability Review (FSR) released by the Reserve Bank of New Zealand, the country’s financial system is sound but remains vulnerable to pandemic-related broader restrictions, supply chain disruptions, and social distancing affecting various businesses and their productivity on account of reduced activities.
The market does not seem to be quite happy with the FSR, as it failed to invoke faith in the New Zealand financial system’s stability. These comments are filled with concerns about the risk of overheating housing prices. Further lower global interest rates make borrowers vulnerable to a rise in mortgage rates.
For this week, investors can turn their attention to the release of Australia PMI data, Building Permits for March, along with the New Zealand Quarterly Unemployment data, Employment change QoQ Q1, Participation rate, and Labor Cost Index. The readings will be interesting to watch as any deviations in the Australian readings will impact the cross negatively.