Antipode currencies. What are they Is it worth investing in them in the near future?

Under this mysterious concept are well-known currencies. According to a large proportion of analysts, a considerable period of time is highly undervalued. Are there any real prospects to earn on their growth in the coming months? What is their fundamental situation and is the appreciation of the (currently) strong dollar likely to succeed?

Antipode currencies

This concept covers, inter alia, the two currencies NZD (New Zealand dollar) and AUD (Australian dollar). They gain mainly when investors' greater risk appetite. Antipodes are in free translation points on the surface of the earth, which in relation to a specific point is on the other side of the globe. In broader terms, we are talking about those areas of the planet that are in its southern part. In this article, we'll focus on the New Zealand dollar and Australian dollar.

Traders often assign different kinds of "common" names to currencies. They constitute a kind of "dictionary". Also the two described by us - AUD and NZD have their equivalents in the language of traders. Aussie is a slang name for the Australian dollar. We call the kiwi NZD. It owes this name to the New Zealand bird that appears on the reverse of the one dollar coin.

Central Banks and the investment perspective

The policy of Central Banks of New Zealand and Australia was quite similar in activity. Both in 2019 reduced the interest rate by 75 basis points. The incentives for cutting were practically the same. Australia, on the other hand, has better prospects in the context of GDP growth. The main repo rate is 0,75%, while in New Zealand it is 0,25% higher. This leaves a kind of margin and potential (we take into account the whole of macro data) that in the current interest rate environment the AUD fatherland will grow faster.

Be sure to read: What can we expect on the currency market in 2020?

To the disadvantage of NZD (we are not talking about a broad market, and compared to AUD) is the inflationary policy, which assumes its growth this year. There is a good chance, however, that the Central Bank of New Zealand will lower interest rates to stay in the target in the context of rising prices. Has more scope for such activities.

New Zealand and higher minimum wage

Quite positive market aspect are the minimum wage increases that are being prepared in the next two years in New Zealand. Their total sum will increase payments by virtually 13%. Higher incomes will certainly translate into higher consumption and larger purchases of luxury goods. The increase in employers' costs associated with this increase should not, however, worry. The relation between the minimum wage and the median wage has been high for quite some time and has been maintained at approximately similar levels. Therefore, the economy is accustomed to absorbing such changes quickly.

AUD - typical "commodity currencies"

Australia's economy is largely based on exports of raw materials. Small population of the country, with a large area and richness of raw materials favors this situation. Aussie is largely a currency based on the volume of fossil raw material sales. Among them can be mentioned mainly gold, nickel, copper, coal and iron ore. As a result, the low demand for these commodities will defensively affect the AUD's valuation, which will entail a depreciation that will be most noticeable relative to major currencies.

Be sure to read: Australian dollar (AUD) [Currency market fundamentals]

G10 basket

It's no secret that the US dollar is one of the most discounted currencies in the G10 basket. Considering that the kiwi has the highest interest rates in the entire harvest and a relatively good economic situation, there is a good chance for its appreciation. AUD's situation is no worse. The situation of possible capital flight to safe havens, considered among others the dollar, remains a risk factor. Such an impulse would arise from well-known situations - for example, the trade war between the US and China. Taking into account Trump's policy, there is a real chance that during his term in office such a risk is extremely high.

Technical situation

Situation at an angle technical analysis on AUD / USD looks quite promising. The rate is in a "stable" growth channel, at levels from February 2019. Lower support has been tested, and strong demand movements in this area may confirm that the price of AUD 0,68620 per USD is considered at least inappropriate. For now, however, we will count on the fact that the price will consolidate between the current support and the nearest resistance, which is balancing around 0,70089.

AUD / USD chart, D1 interval. Source: xNUMX XTB xStation

The kiwi versus dollar chart is slightly more "impulsive". The strong depreciation of the New Zealander lasted practically from the beginning until mid-September 2019. Despite the rebound, there is still a lot of room for growth. The current strong "drainage" of NZD supply from 0,65956 is a good technical perspective for re-attacking resistance located around 0,67354.

NZD / USD chart, D1 interval. Source: xNUMX XTB xStation

The sentiment on NZD / USD alone can be considered at least good, and the fundamental situation should support the appreciation of the New Zealand currency.