AUD/NZD advances into key resistance after RBNZ hike and Australia GDP beat

AUD/NZD remains the purest representation of the contrasting stories in the South Pacific this week. The pair's move toward the resistance area on the daily chart is the main technical focus. The advance was propelled by Wednesday's above-forecast Australian GDP figure and a classic sell the fact response to the RBNZ's fully priced rate hike. Thursday's data supports rather than disrupts this scenario.

Thursday morning brought some data releases.

New Zealand's terms of trade fell far more than forecast, creating a fresh headwind for the kiwi from a trade perspective. Australian PMI readings came in firmer, lending modest support to the Aussie. Neither report alone is large enough to force a break of the resistance level. The reaction at this ceiling is now what matters.

The RBNZ rate hike details and the AUDF GDP beat are in yesterday's Asia-Pacific market recap.

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AUD/NZD has climbed into a resistance area that previously limited the cross. Thursday's weak New Zealand trade figures and stronger Australian PMI readings are not seen as sufficient to alter that challenge.

• AUD/NZD advanced into a daily chart resistance zone, the same area that previously stopped gains, after Wednesday's RBNZ rate hike and Australian GDP beat.
• The rise represents a sell-the-fact response to the RBNZ's fully priced 25bp increase combined with a better-than-expected Australian Q2 GDP figure.
• New Zealand's Q2 terms of trade index dropped 9.0% quarter on quarter, well below the Reuters poll estimate of a 3.9% decline.
• Import prices soared 13.8% versus a 6.8% expected rise, driving the terms of trade decline, while export prices rose 3.5% as forecast and export volumes increased 6.4%.
• On a year-over-year basis, New Zealand terms of trade fell 9.4%, a sharp contrast from the prior year's 12.3% gain.
• Australia's final Services PMI increased to 53.2 from 52.9, and the Composite PMI edged up to 52.7 from 52.5, indicating firming activity in the private sector.
• Neither report alone is considered a major market driver; the AUD/NZD technical setup and this week's central bank and growth themes dominate.

AUD/NZD has moved into a crucial resistance zone on the daily chart, a level that previously halted its rise. The cross is being driven by this week's above-forecast Australian GDP report and a sell-the-fact reaction to the RBNZ rate hike. The rally has been steep and largely one-way since Wednesday. The response at this ceiling is now the main technical issue for the pair as the new week approaches.

The backdrop for the move is essentially the same as on Wednesday. The RBNZ raised rates by a fully priced 25 basis points to 2.75%, its second straight hike, but the guidance was interpreted as more gradual than anticipated, leading to a broad selloff in the kiwi despite the decision meeting expectations. Meanwhile, Australian Q2 GDP came in above forecasts, boosting the relative growth advantage for Australia and giving AUD/NZD a second push along with the NZD's own decline.

Thursday's data barely changed that picture, though it added nuance on both sides. New Zealand's Q2 terms of trade index declined 9.0% from the prior quarter, much more than the 3.9% drop economists expected, per a Reuters poll. The drop was led by a 13.8% jump in import prices, about double the 6.8% increase forecast, while export prices rose 3.5% as forecast and export volumes gained 6.4%. Year-on-year, the terms of trade fell 9.4%, a sharp turnaround from the prior year's 12.3% increase. The magnitude of the miss highlights a significant worsening of New Zealand's external trade position, adding a fundamental headwind for the kiwi in addition to the pressure from the RBNZ.

For Australia, the final Services PMI for August increased to 53.2 from the preliminary 52.9, and the Composite PMI rose to 52.7 from 52.5, both reflecting strengthening private sector activity. These figures are consistent with the broader story of Australian economic resilience that has fuelled AUD strength this week. However, the changes are modest and probably not enough to be a standalone driver for the currency.

Overall, neither report alone seems significant enough to force a break of the resistance level that currently caps AUD/NZD. However, the underlying drivers remain intact: a hawkish move but dovish market reaction from the RBNZ, and stronger Australian growth. Therefore, the pair's bias remains toward eventually retesting that ceiling, so the price action around current levels is the key focus going forward.