AUD/NZD trades above 1.09 for the first time since May 2016

NZD tumbled across the board in the overnight trade after dairy prices fell sharply at the latest GlobalDairyTrade auction.

The AUD/NZD cross rose above 1.09 handle for the first time since May 2016 and currently trades around 1.0910 levels. NZD/USD fell below 0.70 levels as the GDT price index dropped 6.3%, driven mostly by a sharp fall in skim-milk and whole-milk powder prices.

Whole milk powder, which influences the payout to dairy farmers, dropped 12.4% to $2782 a tonne; which is just below the breakeven level for farmers. That is just below the break-even point for many farmers.

The focus now is on the China data. Upbeat export and import figures could lift the AUD/NZD cross to fresh multi month highs.

AUD/NZD Technical Levels

The RSI is above 70.00 - overbought, thus a risk of pull back is high, especially if the China data disappoints markets. Failure to hold above 1.09 (zero figure) could yield a pullback to 1.0831 (5-DMA) and 1.08 levels. On the higher side, breach of 1.0921 (May 10 high) would expose 1.10 (zero figure) and 1.1038 (100% fib expansion level).