AUD/NZD likely to resume selloff as RBA slows tapering timeline
AUD/NZD looking set for further downside, with RBA stretching out tapering timelines as vaccination rates lag behind New Zealand.
New Zealand to ramp up vaccination efforts
Australia and New Zealand have taken a somewhat questionable approach to this pandemic, with the positives of keeping cases down counteracted by the lack of any notable vaccination programme.
That decision to hold off on a widespread vaccination programme from the start raises the risk of continued lockdowns in response to relatively low numbers. The ability to raise protection is going to be crucial in a bid to stave off lockdowns and thus push onto a path of higher rates and strong economic growth.
With that in mind, the efforts in New Zealand are impressive, with daily vaccinations surging over the past month.
That recent vaccination drive has seen New Zealand overtake Australia in total vaccine protection, with the gap likely to grow given the daily rate of jabs seen above.
The Reserve Bank of Australia's (RBA) meeting overnight provided a somewhat mixed tone from the bank, with their plan to go ahead and taper from $5 billion to $4 billion also counteracted by a delay to any further steps. That shift sees the bank project that their next move could come in February rather than November as previously stated.
The AUD/NZD pair has understandably moved lower following that dovish shift, with the downtrend looking likely to kick back in. That plays into expectations that New Zealand will continue to vaccinate at a faster rate, which should also see a relatively more hawkish Reserve Bank of New Zealand (RBNZ).
The chart below highlights how AUD/NZD is coming off the back of a period of weakness that has seen four of five months post significant downside. Notably, we have also seen price drop below 1.0418, bringing a double top formation into play.
With the long-term downtrend in play here, there is a good chance we are set for further weakness. The intraday downtrend remains in play here, with the weakness seen today bringing a bearish continuation signal.
With that in mind, a bearish outlook holds for AUD/NZD, with a break up through 1.0541 bringing about a more positive outlook for the pair.
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