AUD / NZD rises above the 21 DMA but still in long-term downtrend

• The AUD has continued its recent comeback against the NZD, with the AUD / NZD rising above its DMA of 21 and towards 1.06 on Wednesday.
• AUD is a G10 currency outperforming on Wednesday following strong data and amid hopes for China relations

The AUD / NZD broke above its 21-day moving average (DMA), which is currently at 1.0538, in the early part of the European trading session on Wednesday and has since moved towards the 1.0600 level, reaching highs at 1.0594 in trading. Recent As things currently stand, the AUD / NZD is trading a little less than 0.7% higher or around 70 pips.

The Aussie outperforms

The NZD has largely traded based on the strength of the USD so far on Wednesday, as the currency remains more focused on global issues and USD dynamics rather than events in New Zealand. The November e-card sales data is released at 9:45 PM GMT and might steal the attention of NZD traders for a moment, but the focus is likely to quickly return to global dynamics.

Meanwhile, the AUD has forged its own path on Wednesday, outperforming amid a series of (apparently) positive catalysts. First, Westpac consumer sentiment data released during the Asian session on Wednesday showed that the Australian consumer was in poor health in November. This comes after NAB business confidence data released a day earlier jumped to its highest levels since 2018.

Furthermore, during Wednesday’s Asia session, sources suggested that Chinese officials are unlikely to re-evaluate their bilateral free trade agreement with Australia this month, despite recent provocations and accusations by the Australian prime minister that the Chinese have undermined this deal. This news may not exactly signal a turning point for the better in relations between the two countries, but at least it does indicate that a catastrophic (for the Australian economy, anyway) worsening in trade relations has yet to come. The Chinese were going to scrap their trade deal with the Australians, this would devastate the Australian economy, so the AUD could be experiencing a relief rally on Wednesday.

Otherwise, the AUD could also make up for nearly four months of underperformance for the kiwi, which has seen the AUD / NZD drop from the summer highs to late last month lows at 1.0450.

AUD / NZD still in a long-term downtrend

The AUD / NZD may have rebounded on Wednesday, but it has only managed to climb to the top of a long-term downtrend channel, which is linked to the upside by a downtrend linking the highs of October 8, 5 November and is supported by a downtrend that links the lows of September 3, September 25 and December 1. If this trend channel breaks to the upside, the November 13, 16, and 17 highs at 1.0630 will be the next area to watch, and above the 50-200 DMA at 1.0650.

Daily chart