AUD/NZD: Bulls capped at 1.08 handle ahead of key data events

• Aussie CPI is the first of a long string of risk events this week.
• US/Sino trade progress up in the air and weighing on risk sentiment.

AUD/NZD is firm at the 1.08 level while supported by the 21-hour moving average in Asian trade. However, although attempts on the bid at this juncture are failing to convince – AUD/NZD currently trades at 1.0796 having stuck to a range of between 1.0792 and 1.0800. 

AUD/NZD recovered from below 1.0750 as we head into major risk event territory today, with the first coming in the form of Aussie Consumer Price Index. With that in mind, the Reserve Bank of Australia's governor Lowe was crossing the wires in recent sessions stang that the Board, “is prepared to ease monetary policy further if needed. Having said that, it is extraordinarily unlikely that we will see negative interest rates in Australia.” 

Aussie CPI coming up

Therefore, should the CPI data impress, we could see a meaningful upside extension in AUD crosse – Australia’s Q3 CPI data is due at 11:30am Syd/8:30am Sing/HK. "The median forecast is 0.5%qtr, 1.7%yearr overall (from 1.6% in Q2) and 0.4%qaurter, 1.6%year on the trimmed-mean CPI, the RBA’s preferred core measure," analysts at Westpac noted."But importantly, we look for a sub-consensus 0.3%quartertr, 1.5%year on the trimmed-mean CPI and 0.3%quater, 1.2% year on the other RBA core measure, weighted median," the analysts added.

"While the RBA has been talking mostly about the unemployment rate in recent months, every CPI report is important for its forecasts which are updated just after the release. A core CPI reading in line with our expectations should keep markets pricing in a reasonable risk of another rate cut before year-end."

US/Sino trade sentiment dented

Elsewhere, it should be noted that there are some turns in sentiment towards a Sino/US trade deal being ready so soon. Trump had been talking about the prospects of a deal being ahead of schedule as we move towards the APEC Chile summit net month. However, in an earlier Reuters report, it was quoted that a US official as saying that the US-China Phase 1 trade deal may not be ready to be signed by the APEC meeting (15th-17th Nov), but that, “that doesn’t mean that it falls apart. It just means that it’s not ready.” However, the White House later stated that the aim remained to sign the deal in Chile. In more recent headlines, it was reported by Reuters that China's U.N. Ambassador, Zhang Jun, had warned on Tuesday that U.S. criticism at the world body of Beijing's policy in remote Xinjiang was not "helpful" for negotiations between the two countries on a trade deal.

Forthcoming data

Looking ahead, we have a long streak of key economic data on the cards for the week and into month-end. Aussie CPI will kick us off, but we also have Chinese PMIs as well as the Federal Open Market Committee and US nonfarm Payrolls. while neither are directly domicile to the cross, they are market movers and depending on the outcome, it will usually be the Aussie that is most affected one way or the other – A sold greenback could cap AUD and give some life back to the bears in AUD/NZD. 

AUD/NZD levels