AUD/NZD hits 3-1/2 month high

AUD/NZD cross hit a 3-1/2 month high of 1.0693 on the back of an upbeat Aussie NAB business conditions and strong Chinese PPI number.

Reflation gathers steam

Chinese PPI rose for the fifth straight month, which means the world’s second largest economy is exporting inflation to the global economy. This is good news for the Aussie dollar, given the currency’s strong correlation with copper, iron ore and other industrial metals.

On the other hand, Kiwi dollar is less correlated to industrial commodities. Furthermore, RBNZ shocked markets last week with its dovish interest rate forecasts.

The cross was last seen trading around 1.0680 levels.

AUD/NZD Technical Levels

A break above 1.0704 (Nov 1 high) would open up upside towards 1.0743 (Aug 9 high), above which a major hurdle is seen at 1.0765 (Oct 14 high). On the other hand, a breakdown of support at 1.0678 (previous day’s high) could yield a pullback to 1.0635 (session low) and to 1.0621 (5-DMA),