Australia and New Zealand are so close to one another, which makes them close trading partners. The countries belong to the ASEAN-Australia-New Zealand Free Trade Agreement. The other members of this block are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
According to the Australian Trade and Investment Commission, Australia exported goods worth more than A$13 billion to New Zealand. It imported goods worth more than A$11.8 billion. This makes New Zealand the seventh most important trading partner for Australia. The biggest ones are China, United States, Japan, South Korea, India, and Hong Kong. For New Zealand, Australia is the second most important trading partner after China.
The AUD/NZD cross is therefore an important one for the Australia and New Zealand trade. In the past few weeks, the pair has soared after a couple of positive data from Australia. This week, the country released employment numbers that beat the consensus estimates. In addition, China released positive economic numbers, which showed that the global economy is doing well. These numbers overshadowed the RBA’s minutes that said the bank would consider cutting rates if the economy continues to weaken. Meanwhile, in New Zealand, the inflation numbers released yesterday were below expectations. The headline CPI for the first quarter rose by 1.5%, which was lower than the expected 1.7%. On a quarterly basis, the headline CPI number rose by 0.1%, which was lower than the expected 0.3%.
Therefore, the AUD/NZD pair rose sharply to a YTD high of 1.073. On the chart below, this price was above the 21-day and 42-day moving average. I prefer the two averages because they represent the 3-week and 6-week averages of a pair. The RSI has moved to almost the 70 level. In the near term, the pair could continue moving higher, to test the important resistance level of 1.100.