AUD/NZD drops to 1.0850 despite RBA status quo, Country Garden news

• AUD/NZD remains pressured at one-week low despite RBA’s inaction, risk-positive China updates.
• RBA keeps benchmark rates unchanged at 4.1%, shows readiness for rate hikes to tame inflation.
• China’s Country Garden managed to avoid default by paying $22.5 million US bond coupons.
• Softer China PMI contrasts with Beijing’s efforts to defend economic recovery and prods pair sellers.

AUD/NZD takes offers to refresh intraday low around 1.0850 even after the Reserve Bank of Australia (RBA) matches market forecasts of keeping the benchmark rates unchanged on early Tuesday.

That said, the Aussie central bank keeps the benchmark rate intact at 4.1% but shows readiness to lift the rates as and when necessary to tame the inflation woes.

Not only the RBA’s status quo but headlines from China, a major customer for Australia and New Zealand, also should have put a floor under the AUD/NZD prices but were largely ignored.

That said, China’s biggest reality player Country Garden manages to avoid default by paying $22.5 million US bond interest. It’s worth noting that the Chinese real-estate giant won approval from onshore creditors to extend a private bond payment worth CNY3.9 billion ($536 million).

Elsewhere, China’s Commerce Ministry pledged to support the qualified enterprises to make good use of domestic and overseas listing, as well as bond issuance. On Monday, China’s readiness for opening up the services industry, as well as developments of the manufacturing activities, joined a slew of measures to cut mortgage rates and infuse more liquidity to keep the Asia-Pacific markets hopeful.

It should be noted that upbeat prints of Australia’s S&P Global Composite PMI and Services PMI, to 48.0 and 47.8 versus 47.1 and 46.7 respective priors, also occupy the positive side and prods the AUD/NZD bears.

Against this backdrop, the S&P 500 Futures print mild losses around 4,515, down 0.15% intraday after reversing from a one-month high the previous day, while the US 10-year Treasury bond yields rose two basis points (bps) to 4.20% after the US holiday-driven inaction.

Looking forward, Australia’s Gross Domestic Product (GDP) for the second quarter (Q2) of 2023 and a speech from the outgoing RBA Governor Philip Lowe will be important for clear directions.

Technical analysis

A one-month-old rising wedge bearish chart pattern, currently between 1.0840 and 1.0900, keeps the AUD/NZD sellers hopeful.