On November 20, AUD/NZD extended its decline for the second consecutive trading day, hovering around 1.1520 during the Asian session on Friday. The currency pair's downward movement was primarily driven by New Zealand's trade data release. The figures showed that New Zealand's trade deficit narrowed year-on-year to NZ$2.28 billion in October, compared to NZ$2.39 billion previously, with exports rising 16% to NZ$6.5 billion and imports increasing 11% to NZ$8 billion. While the narrower deficit provided short-term support for the New Zealand dollar (NZD), persistent economic growth headwinds limited its upward momentum against AUD/NZD. Analysts suggest investors should monitor shifts in export composition and import costs, which could influence NZD performance in coming months.

From a policy perspective, the NZD faces notable downside risks. Markets widely expect the Reserve Bank of New Zealand (RBNZ) to cut the Official Cash Rate (OCR) by 25 basis points to 2.25% at next week's monetary policy meeting, following last month's surprising 50-basis-point reduction. This reflects the central bank's cautious stance on growth and inflation outlook. Such dovish expectations may continue weighing on the NZD, thereby affecting AUD/NZD dynamics. With heightened sensitivity to rate changes, any policy statement or economic data deviation could trigger significant volatility. Traders are advised to closely track RBNZ decisions and key data releases to gauge NZD sustainability.

Meanwhile, the Australian dollar (AUD) demonstrated relative resilience. Australia's preliminary November S&P Global Manufacturing PMI rebounded to 51.6 from 49.7, while Services PMI rose to 52.7, lifting the Composite PMI to 52.6. These figures indicate expanding activity across both manufacturing and services sectors, underpinning AUD strength. Australia's economic resilience, coupled with expectations that the Reserve Bank of Australia (RBA) may maintain steady policy, has bolstered AUD sentiment. RBA meeting minutes further suggested rates could remain unchanged if economic improvements persist, mitigating AUD/NZD downside pressure.

In summary, AUD/NZD's near-term trajectory hinges on two key factors: NZD vulnerability from domestic economic data and RBNZ policy expectations versus AUD stability supported by Australia's economic performance. The pair may oscillate between 1.1450-1.1600 in coming weeks, with NZD's reaction to RBNZ decisions and AUD responsiveness to Australian data driving cross-directional moves. Given elevated market sensitivity to rate and trade developments, unexpected news could spark sharp short-term fluctuations, warranting cautious position management.