AUDNZD grinds higher past 1.0900 on softer NZ data ahead of China CPI

• AUDNZD picks up bids to extend the previous day’s recovery amid risk-on mood.
• New Zealand’s Electronic Card Retail Sales grew past forecasts in October but eased from priors.
• Strong equities, bonds allowed buyers to keep the reins despite mixed Aussie statistics.
• Bulls may have a tough task defending the gains should China’s monthly inflation data, covid news surprise.

AUDNZD holds onto the previous day’s upside momentum around 1.0925 during the initial Asian session on Wednesday. The risk-on mood and softer data from New Zealand (NZ) seemed to have favored the buyers previously. However, cautious sentiment ahead of the key China inflation numbers and covid fears challenge the pair’s upside of late.

That said, New Zealand’s Electronic Card Retail Sales eased to 1.0% MoM growth in October versus 1.3% prior and 0.2% expected. Further, the yearly figures suggest 16.6% increase in the data compared to 28.6% previous readings and 11.4% market forecasts.

On Tuesday, National Australia Bank’s (NAB) Business Conditions eased to 22 in October from 25 prior, versus 20 forecast. Further, the NAB Business Confidence slumped to 0 during the stated month compared to the market’s consensus of reprinting 5 figure. Additionally, the Westpac Consumer Confidence slumped to -6.9% in November versus -0.9% prior. Further, the weekly print of ANZ-Roy Morgan Consumer Confidence dropped to the lowest levels since April 2020, to 78.7 at the latest. The details of the report also mentioned that the inflation expectations were the highest since the data was first released in April 2010.

It should be noted that the hopes of easy spending, due to challenges for the US Democrats in the Mid-term Elections, seemed to have triggered the latest wave of optimism in the markets amid a lack of major data/events. In doing so, the traders also pay little attention to China’s covid woes as it registered the highest numbers in six months the previous day.

While portraying the mood, Wall Street printed a three-day uptrend whereas the US Treasury yields slumped, which in turn allowed the risk-barometer Australia Dollar (AUD) to rise.

Moving on, the key China Consumer Price Index (CPI) and the Producer Price Index (PPI) for October will challenge the pair buyers should the numbers suggest the need for the Reserve Bank of Australia (RBA) to remain cautious.

Technical analysis

AUDNZD bulls remain off the table unless witnessing a clear upside break of the 200-DMA and the six-week-old resistance line, respectively around 1.1010 and 1.1025.