The Australian and NZ Dollars Slightly Slip as Investors Await Wage Data Release

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The Australian and New Zealand dollars held steady on February 14 as traders braced for critical wage data from Australia and the latest rate decisions from the Reserve Bank of New Zealand (RBNZ) and the U.S. Federal Reserve. 

The Australian dollar has steadily increased over the past week, buoyed by positive sentiment in global markets. It trades around $0.6896, up 0.5 per cent overnight to as high as $0.6920, thanks to significant gains in China’s financial markets on reopening expectations. It now has support at the 200-day moving average of $0.6805 and resistance at its 14-day moving average of $0.6932.

The Reserve Bank of Australia minutes released on the same day showed that the central bank had given up the idea of halting at its policy meeting earlier in the month and received little attention in the Antipodes.

Following an overnight increase of 0.2 per cent, the kiwi dollar fell by 0.2 per cent to $0.6241. The 200-day moving average, or $0.6186, provides strong support.

“Cyclone Gabrielle could result in capital inflows from overseas insurers to New Zealand later this year,” according to Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.

Yet according to Capurso, “these capital inflows are unlikely to have a big impact on NZD/USD in 2023,” and the flows are probably modest.

The Reserve Bank of New Zealand is generally anticipated to increase its benchmark interest rate by 50 basis points to 4.75 per cent on Wednesday, despite the economy experiencing significant disruptions.

Traders are anticipating the Australian wage data, which might assist them in determining how far higher rates would need to go. The fourth quarter of last year is expected to see wage growth rise to a 10-year high of 3.5 per cent.

Ultimately, investors will closely monitor the release of critical data from the RBA, RBNZ, and Fed to make an informed decision about their next move in this volatile market.

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