AUDNZD - remember the head and shoulders target of 1.0250

The cross comes and goes from the radar, but AUDNZD is the crowd favourite when we're talking central bank divergence trades. The NZ unemployment rate at 4% has opened up a small chance of a 50bp hike in the 18 August meeting, although given the recent tighter lending practices, the RBNZ will go 25bp. Go further out the swaps curve and we see the NZ cash rate at 1.25% in 12 months - pricing four hikes.

The RBA on the other will keep the taper schedule in place, which has given the AUD some support, but the somewhat dour view on inflation suggests we wont get rates 'lift-off' until late 22/early 2023.

Your quintessential divergence trade

There will be short-covering rallies, but the trend is absolutely your friend and this should trade to 1.0250