AUD-NZD

AUDNZD is the ticker symbol for the Australian dollar to New Zealand dollar exchange rate on the Forex markets. Both the Australian dollar (Aussie) and the New Zealand dollar (Kiwi) are considered major currencies. Still, the AUDNZD is regarded as a minor currency pair because it does not constitute the US dollar. Minor currency pairs typically feature lower liquidity and trading volumes compared to major currency pairs. They are also traded with relatively wider spreads. 

In the AUDNZD Forex rate, AUD is the base currency, whereas NZD is the quote/counter currency. This means that at any given time, the price of the AUDNZD represents the amount of New Zealand dollars it would take to exchange for one unit of the Australian dollar (1 AUD to NZD). 

History of AUDNZD

AUDNZD is an interesting pair on the forex markets. Both Australia and New Zealand share a unique geographical location (far away in Oceania) and are only separated by the Tasman sea. The two countries have a shared history and heritage, and close relationships. Furthermore, their national currencies have an almost similar historical path.

The Australian dollar is the official currency of Australia, Norfolk Island, Cocos Island, and Christmas Island. It is also used officially in Tuvalu, Kiribati, and Nauru. The Australian dollar was introduced in 1966, replacing the Australian pound that had been in circulation since 1910. The move marked the country’s adoption of decimalization, abandoning the complex Sterling system that divided 1 pound into 20 shillings, which were further divided into 12 pence. One Australian pound was exchanged for 2 Australian dollars at inception. 

The AUD was initially pegged to the US dollar, but it has been freely floated in the markets since 1983. AUD is the 5th most traded currency globally (as of March 2022), although Australia itself is the 13th largest country by GDP. AUD is one of the most important ‘commodity dollars’ in forex markets because Australia is a major producer and exporter of natural resources such as iron ore, coal, and gold. Australia also boasts a robust modern economy and counts both the US and China as important trading partners. 

Like the AUD, the decimalized NZD was introduced in 1967 to replace the complicated Sterling-denominated New Zealand pound. The NZD is the official currency of New Zealand, Cook Islands, Niue, Tokelau, and the Pitcairn Islands. The NZD was initially pegged to the US Dollar, but since 1985, it has freely floated in the market. The NZD is the 10th most currency globally, but New Zealand is the 50th largest country by GDP. New Zealand’s economy is less versatile than Australia’s and is largely supported by agricultural products (mainly dairy) and tourism. The NZD is also considered a ‘commodity dollar’ in the forex markets, and it draws its strength for being a high-yielding currency suitable for ‘carry trading’ strategies. 

AUD and NZD are correlated currencies that typically trade in the same way against other currencies. But against each other, they offer unique lucrative opportunities for traders. 

AUDNZD Historical Performance

The AUD/NZD pair traded around 1.25 at the turn of the millennium. The pair then embarked on a downtrend that saw it dip to lows of circa 1.05 by late 2004. It then picked up upward momentum punctuated by high volatility during the 2007/8 Great Recession. It peaked at circa 1.37 in early 2011 before turning sharply lower to around 1.04 in early 2015. In recent years, the AUDNZD has traded between 1.02 and 1.12. 

Major Bodies Influencing the AUDNZD – AUD to NZD Trading

Here are some factors to look out FOR when engaging in AUD/NZD trading:

Reserve Bank of Australia (RBA)

The RBA is the central bank of Australia. Its mandate is to ensure financial stability and promote economic prosperity for the country and the people of Australia. The RBA meets every first Tuesday of every month (except January) to set the official cash rate and announce their monetary policy stance. The RBA is an active centre that has a significant influence on the value of the AUD. 

Australian Bureau of Statistics (ABS)

As the national statistics agency, the ABS is tasked with producing and publishing vital economic statistics in Australia. Some of the indicators that have a high impact on the AUD include the Unemployment Rate, Consumer Price Index, and Trade Balance. 

Reserve Bank of New Zealand (RBNZ)

The RBNZ is the central bank of New Zealand, and it has the mandate of promoting a sound and dynamic monetary and financial system in the country. The bank releases Monetary Policy Decisions 7 times a year and Monetary Policy Statements quarterly. Additionally, RBNZ also publishes Financial Stability Reports semi-annually. All these are high-impact events for the NZD. 

Statistics New Zealand

Statistics New Zealand is the country’s national statistics agency. Some of the crucial indicators it publishes that may significantly impact the NZD include the GDP, Consumer Price index, Unemployment Rate, Imports & Exports, and Travel & Tourism data.

AUDNZD Correlations

The AUD and NZD generally trade the same way. There are, therefore, not many currency pairs that have absolute correlations with the AUDNZD. Nonetheless, AUDNZD tends to be positively correlated with EURSEK and GBPSEK; and negatively correlated with SEKJPY and USDTHB. 

** Disclaimer –While due research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.