It’s not just Wallabies that are looking in the trans-Tasman equation right now.
The New Zealand dollar could be about to hit parity with its Australian counterpart for the first time on record, according to Citibank’s FX technical analysis team.
Tom Fitzpatrick, Shyam Devani, Dan Tobon and Beimnet Abebe say the AUD/NZD cross is following a “similar path to that seen from 2014-2015 where it ultimately went down to just shy of parity”.
Here’s a chart from by the bank.
As they suggest, the price action in the AUD/NZD recently looks almost identical to that seen two years earlier.
“Then, we saw a rally from just below 1.05 to 1.13 before consolidating for a few months. A sharp decline over 10 weeks took AUDNZD down to 1.03 which was followed by a sharp bounce to just shy of 1.08. The downtrend then resumed with a low of 1.0021 being hit,” they wrote in a research note released earlier this week.
“This time we saw a rally from just below 1.05 to 1.13 before consolidating for a few months. A sharp decline over 11 weeks took AUDNZD down 1.03 which was followed by a sharp bounce to just shy of 1.08.”
The team suggests suggest the “downtrend appears to be resuming”, posing the question whether parity between the two currencies could be on the cards.
“It is worth remembering that the 1.04-1.05 area on AUDNZD is historically pivotal and that the only monthly close below there took place in February 2015,” the wrote·
“A close this month below 1.04 gives further confirmation a move to parity is likely.”
The AUDNZD closed Tuesday’s session at 1.0430, and has been as low as 1.0408 in recent days. It currently fetches 1.0453.
Should Citi be correct, it will simply provide yet another excuse for Wallabies fans to avoid travelling to New Zealand to watch future Bledisloe tests.