If the FX market is one big interest rate play, as many would contend, then we should be in the ‘sell-rally’ camp when it comes to AUD/NZD.

The RBNZ, very surprisingly in my view, added a hawkish tone to their monetary policy statement whilst the RBA have a definite dovish tone. A widening of the interest rate spread will be very bearish for AUD/NZD. The commodity stories for both currencies seem to balance each other out; with falls in iron ore affecting the Australian economy and falls in the milk price affecting NZ.

With a technical top now around 1.0925, selling rallies with stops clearly above there would seem to be the sensible medium-term trade.