All about the base Part II: AUD/NZD

In an article last week, we made note of the support the AUD/USD had received from surging commodity prices. Since then, copper has traded sideways, consolidating its 15% rally since the start of November, content to hand the baton over to the price of iron ore, up ~12% over the past week.

Commodities 7

The latest surge in the iron ore price is on supply concerns after Brazilian miner Vale lowered its production forecast, falling steel inventories and as global demand picks up, the iron ore market is expected to remain tight into 2021.

An imbalance that overnight prompted a large US investment bank to revise higher its price forecast for iron ore, just one week after it upgraded its copper price forecast. All of which are supportive of the AUD.

However, events closer to home have also paved the way for continued strength in the AUD. Yesterday, the Westpac consumer confidence data series rose to its highest level since October 2010. It was the fourth straight monthly rise for the index and indicates that just eight months after the COVID19 slow down, consumer sentiment has completely recovered.

For those who have sympathy for the bullish AUD view though would prefer to sidestep the cross-currents involving the US dollar, AUD/NZD is a cross rate considering. More so given its resilience despite overnight weakness in U.S equity markets.

Technically the view is the retracement from the August 1.1043 high has been countertrend and the rebound from just ahead of the 61.8% Fibonacci retracement (of the March to August rally) at 1.0396, has provided initial confirmation a medium-term low is in place at the recent 1.0418 low and the uptrend has resumed. 

Further confirmation, would be a break above trend channel resistance 1.0700/20 which would then allow the rally to extend towards 1.1000/50.

In light of this, traders may consider buying dips in AUD/NZD back towards support 1.0580/60 and with a stop loss placed just below 1.0500. The initial target would be 1.0700, before 1.0900, and beyond that 1.1050.

All about the base Part II: AUD/NZD

Source Tradingview. The figures stated areas of the 10th of December 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.