Forex Flash: AUD/NZD overbought ahead of RBA next week – NAB

FXstreet.com (Barcelona) - The AUD/NZD has come a long way since March and technical indicators such as the daily RSI suggest the currency is marginally ‘overbought’. What’s more, speculative net long positions are much larger in NZD relative to AUD. “This suggests the kiwi is relatively more vulnerable should any negative piece of global and/or New Zealand news trigger a flight back into ‘safe-haven’ assets and at least temporary aversion to the NZD.” writes the NAB Analyst Team.

Also, in relation to our short-term AUD/NZD fair value model the cross has become slightly cheap (we have a ‘fair value’ range of approximately 1.2425 - 1.2125).

These factors raise the risk of a pause or backup in the uptrend and next week’s RBA meeting could be the catalyst for such. The RBA decision is now a line ball call, and while we do believe incoming Australian economic Data relating to the housing sector in particular - together with the apparent deterioration in the global demand backdrop, justifies additional easing, we are not convinced the RBA will yet see things the same way having throttled back on its easing bias just four weeks ago.