AUD/NZD at five-year lows

<p>The main news overnight ahead of the all-important FOMC taper decision tomorrow night was the contrast in central bank views across the Tasman sea, which […]</p>

The main news overnight ahead of the all-important FOMC taper decision tomorrow night was the contrast in central bank views across the Tasman sea, which has seen AUD/NZD trade at a fresh five-year low of 1.0781. Australian Treasurer Joe Hockey maintained Australia’s 2013/14 GDP forecast of 2.5% but cut the 2014/2015 estimate by 0.5% to 2.5%, adding that the budget deficit for 2014/2015 is likely to increase to AUD 34billion as he warned that tax cuts will be off the agenda for a decade. This was in complete contrast to the New Zealand government who increased their growth forecasts by 0.3% for 2014 and by 0.6% for 2015 as they looked to post a budget surplus of NZD 86million for 2014/2015.

The data highlight today will be CPI data from the US. This for me is of extreme importance ahead of the taper decision as all boxes are ticked with regard to the Fed’s employment mandate but with inflation so low the Fed may want to refrain from taking their foot off the QE pedal. The European session brings us inflation data from the UK and EU along with the German ZEW Index.



Supports 1.3740-1.3700-1.3675 | Resistance 1.3800-1.3835-1.3880



Supports 102.65-102.15-101.60 | Resistance 103.40-103.75-104.00



Supports 1.6300-1.6260-1.6220 | Resistance 1.6400-1.6465-1.6500


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