The economies in New Zealand and Australia are in reasonable shape, at least in comparison to the rest of the world. Modest growth, improving employment and contained inflation are common themes. Demand for the pure foods of both countries, and the mineral commodities of Australia, is likely to pick up as the economy in China stabilises and the US activity accelerates.
Recent rises in iron ore, oil and coal have supported the AUD. This pushed AUD/NZD to the top of the trading range established since the middle of last year. However, over the same period global milk powder prices rose from below US $2,000 per tonnne to peak above $3,500. Currently lower around $3,200, it is arguable that this fillip to the NZ economy is not fully reflected in AUD/NZD pricing.
The chart helps to push this picture. Sitting just below important resistance at 1.0758, the RSI is now clearly in overbought territory, potentially placing currency traders on alert. Any indication that a down move is starting could see sellers jumping into the market. Note the MACD at the bottom of the chart. The gap between the red and black lines is relatively wide, indicating persistent positive momentum. However, the gap is narrowing. A drop below 1.0700 could see the MACD cross.
Top of the range, an overbought RSI and a psssible clear sell entry signal. What more do traders want?