AUD/NZD faces barricades around 1.0700 on downbeat preliminary Aussie PMI

• AUD/NZD is facing barricades around 1.0700 on weaker-than-projected preliminary Australian PMI data.
• Preliminary Manufacturing and Services PMI have contracted to 48.7 and 48.2 respectively.
• New Zealand’s growth rate is expected to hit badly as the consequences of the flood situation will be reflected ahead.

The AUD/NZD pair is struggling to recapture the round-level resistance of 1.0700 in the Asian session. The release of the downbeat preliminary Australian S&P Global PMI data has impacted the Australian Dollar. The Manufacturing PMI has landed at 48.7, lower than the consensus of 50.3 and the former release of 50.5. Also, the Services PMI has dropped significantly to 48.2 from the expectations of 49.9 and the prior print of 50.7.

It looks like higher rates from the Reserve Bank of Australia (RBA) have trimmed the scale of economic activities dramatically. Households with lower funds are struggling to offset the inflated prices of goods and services, which have forced producers to operate with less capacity. Lower output signifies weak retail demand that might result in inflation softening and will delight RBA policymakers.

Investors should be aware that the RBA has already pushed its Official Cash Rate (OCR) to 3.60%. RBA policymakers have started considering a pause in its Quantitative tightening program from April to assess the impact of current monetary policy.

Next week, monthly Australia’s Retail Sales (Feb) data will be keenly watched, which is expected to expand by 0.4% lower than the former expansion of 1.9%. The least expansion in retail demand would bolster hopes for further deceleration in the Australian Consumer Price Index (CPI) ahead.

Meanwhile, the New Zealand Dollar is expected to remain on tenterhooks as New Zealand’s growth rate is expected to hit badly due to the flood situation. The NZ economy would require plenty of time to attain full recovery. The economy is still worried about elevated inflation, which is impacting households dramatically. More rate hikes are expected from the Reserve Bank of New Zealand (RBNZ) to bring down inflation meaningfully.