AUD/NZD beating on the doors of the 1.07 level where next?

• AUD/NZD extends the upside trend, taking on the 1.07 handle. 
• Commodities tugged and pulled by oil, but AUD carries on regardless. 

AUD/NZD has rallied to test the vicinity of the 1.07 handle having surged in the last few sessions from a touch below the 1.06 handle, extending the rally from the 1.0480s earlier in the month. At the time of writing, AUD/NZD is trading at 1.0698 within the session's range of 1.0676 and 1.0711. 

Commodity complex seeking traction

AUD has been in great shape of late, ploughing through key technical resistance in the 0.64 handle and defying gravity at the start of this week, holding on to positive territory. In an improved risk environment, the commodity complex has been trying to find traction, although the price of oil continues to weigh heavily, dragging on the market in general. "The ANZ China Commodity Index ended the session down 2.7%, driven by a sharp fall in the energy sector (-9.6%)," analysts at ANZ Bank explained today.

"This cast a pall over the rest of the sector. Bulk commodities fell as iron ore and coking coal prices remained under pressure. Weakness in sugar and palm oil also weighed on the agriculture sector. Industrial metals were mixed, with losses in aluminium and nickel offset by a gain in copper. Precious metals also waned, as gold inched lower."

Nonetheless, AUD/USD was by far the strongest G10 currency, up 1.4% over the day to 0.6460, including a 6 week high of 0.6472. The kiwi also had a strong +0.5% performance vs the USD but is in danger of a trip towards the 1.09 handle vs the Aussie if bears do not step in soon as the cross prints highs, not seen since the 13 November 2019 RBNZ meeting. However, in reality, there is very little to distinguish AUD and NZD, but this is certainly a case of "the trend s your friend." 

AUD/NZD levels